Commodity prices up, coffee prices up?

[Beanhead]

Interesting to note that coffee bean prices havent moved much despite prices of staples such as wheat, rice, sugar, cooking oil etc skyrocketing over the last year. Should CSers be prepared and hoard beans in preparation for bean prices going through the roof????

Is our habit about to become a luxury? :-[

[speleomike]

Re: Commodity prices up, coffee prices up?

Hi all

I have noticed the extra advertising by McDonalds with MacCafe and StarBucks in US are now trying to convince customers that they have beter coffee with their "brewed just for you" machine. And Fairtrade and Rainforest Alliance are advertising more too. I think this extra demand by two big consumers for good name arabica coffee will inevitably push up the price.

Mike

[Koffee_Kosmo]

Re: Commodity prices up, coffee prices up?

Add Gloria Jeans to that as the have in store info to there association with the Rainforest alliance

The price will move if the demand is greater
If the demand shifts sideways to another method of consumption without increase in demand it should stay stable

I think that’s right ???


KK

[Beanhead]

Re: Commodity prices up, coffee prices up?

What I was meaning was that the combination of increasing demand from India/China, increasing demand on arable land for food/ fuel production, effects of global warming and increased fuel/ fertilizer input costs may drive up the cost of coffee beans same as those things have driven up the cost of staples.

[Javaphile]

Re: Commodity prices up, coffee prices up?

Roughly one third of the final cost of coffee is transportation/energy costs. With the price of oil having doubled in the last 12 months and still continuing to climb every day that alone has added 15% to the price of beans in the last 12 months. A year ago beans were at 110 at the NYBOT. Today theyre at 135.

High end bean prices have not been affected as much as they have higher margins. The increased energy prices have to a large degree been absorbed/subsidized by the growing and distribution chain. With energy prices continuing to climb however those increased costs can no longer be born by the chain and prices to the consumer will inevitably reflect that reality.

Importers here in the US that Ive talked too are quoting the current SO crops making their way here at roughly 15% higher than last years prices. This of course does not include the transportation costs of having them delivered to you. If the beans are being shipped to you from the importers warehouse (rather than you picking them up in person) youre then looking at up to a 50% increase over last years shipping costs. All up its an easy 20% increase in costs from a year ago.

Ive been advising people for some time now to stock up as prices will go nowhere but up. Having taken my own advice I now have just shy of 400kg of beans.


Java "All stocked up!" phile

[Beanhead]

Re: Commodity prices up, coffee prices up?

I was thinking that there may be more than fuel prices at play. If espresso coffee becoming more popular in China and India then worldwide demand for coffee beans will increase massively . Think how much more coffee per person is drunk in Australia now than even say 10 years ago. This will put more demand in existing coffee growing areas to expand, although there are limitations as to where coffee can be grown and it seems like there is less available land around which could be turned into coffee plantations (not to mention global warming affecting the viability of coffee production in some areas). Infact there may even be enough incentive at the moment to plough up coffee plantations and grow staple crops instead.

My analysis may be completely wrong. To answer this question may take the expertise of a developing world expert in agronomy/ economics with an interest in coffee production.

[Thundergod]

Re: Commodity prices up, coffee prices up?

I thoght global warming would help not hinder coffee production.

Coffee plants dont like frost.

[Beanhead]

Re: Commodity prices up, coffee prices up?

Possible GW scenario is that the Snowy Mountains becomes a coffee growing area in 50 years time. Ie existing tropical highlands become too warm to grow coffee and the temperate highlands become tropical.

[Javaphile]

Re: Commodity prices up, coffee prices up?

For the immediate future, the next 3 years, most of the increased demand for coffee is expected to be for the lower quality beans. As such the world wide increase in demand for coffee wont be for the higher end beans we use. This general increase in demand is expected to exert a small pressure on the prices of the higher end beans as a few of the smaller players move up in the quality of the beans they use as the lower quality beans increase in price. The increase is expected to be far less than the price jump higher transportation costs will bring however.

More than 3 years down the road? Whos to say. Theres too many variables at play and the best that anyone could say would be but a guess. The world wide demand for more beans may end up being but a trickle if the price of energy continues to spiral upward and the world economy downward. The only 2 really sure bets are that the biggest factors on the price of coffee will continue to be weather and energy costs.


Java "Not an Economist, but plays one on the week-ends" phile

[Beanhead]

Re: Commodity prices up, coffee prices up?

Thanks for the thought that has gone into your responses JP. As you illustrated, the world of commodity prices is a complex one. If we were able to work those things out I guess we would end up rich.

Still to early to consider growing coffee bushes on the balcony in Sydney...

[Thundergod]

Re: Commodity prices up, coffee prices up?

I have 2.