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Thread: Coffee prices have dropped.

  1. #1
    Senior Member Yelta's Avatar
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    Coffee prices have dropped.

    Gene Cafe Coffee Roaster $850 - Free Beans Free Freight
    Out of curiosity I checked the NASDAQ price for coffee today, interesting chart, its fallen around 60% since 2011.

    Around March 2011 187 cents

    Last night. 106.85 cents



    I certainly don't see it reflected in the local market, I believe the price quoted is per pound
    http://www.nasdaq.com/markets/coffee.aspx?timeframe=3y
    Last edited by Yelta; 31st October 2013 at 07:00 PM. Reason: correction

  2. #2
    TC
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    I would have thought it's reflected in commodity coffee. Thankfully most of us here are not interested in that stuff. Perhaps it's why you can buy rubbish coffee for $8 retail roasted.

    I'm more than happy to pay for specialty coffee. Cheap stuff- I'll leave it for others.

    I'm glad that what we buy here is ethical and delivers fair prices to those who grow and pick ours.
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    Senior Member Barry O'Speedwagon's Avatar
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    Surely March 2011 is the near the historical peak though.....we're at about the 2009 average price now aren't we?

    I would think (but do not know for sure) that the premia over the base commodity would move through time....so the volatility in base grade is likely greater than that of higher quality stuff. Just guessing.

  4. #4
    Senior Member Yelta's Avatar
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    I wonder about the pricing structure world wide, we tend to hear only what we are drip fed by the Aust media, last year there were predictions of a dud crop in some South American countries (I believe because of some insect infestation) then we find reports like this.
    Plunging Coffee Prices Don't Make Coffee Stocks a Buy | InvestorPlace

  5. #5
    Senior Member Yelta's Avatar
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    Quote Originally Posted by Talk_Coffee View Post
    Perhaps it's why you can buy rubbish coffee for $8 retail roasted.
    I'm sure your right Chris, just trying to make some sense of whats happening.

    Are there two or more marketing systems, i.e. for commodity coffee and for higher grade beans aimed at the boutique market?

  6. #6
    Senior Member Barry O'Speedwagon's Avatar
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    There's a good explanation of part of it (by Andy) here:

    http://coffeesnobs.com.au/general-ne...12-beyond.html
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    Well technically speaking, it's the ICEUS price for coffee, not the NASDAQ's. Commodities are mostly traded on the futures market not the stock exchange. But I reckon we aren't too far off using NASDAQ security price movements to determine the supply and demand of coffee because market sentiment throws a pretty wide blanket; regardless of the financial instrument in question.

    So on that note, if we were to presume that NASDAQ (home to large floated mass producers of horrible coffee i.e. Starbucks) has a direct correlation to the commodity price index then you would've figured out by now that your specialty coffee roasters aren't large corporations listed on the NYSE or NASDAQ, meaning they have no representation whatsoever on the commodity price index… Kinda making that chart irrelevant for the coffeesnob :P. Your best bet would be to select a large specialty roaster (though that seems like an oxymoron to me) and simply chart their movement for a better idea of pricing for higher grade beans simply because the commodity price index would be muddied by Starbucks and other big bad coffee conglomerates.

    Perhaps you will stand a better chance at determining the price movement of specialty coffees by looking at the FTSE100 or BLT (presuming the Poms and the Italians appreciate good coffee).

  8. #8
    Senior Member Barry O'Speedwagon's Avatar
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    Avex.....the link that Yelta provided was in fact to a schedule of commodity futures prices for coffee....it just happened to be available on the NASDAQ site.

  9. #9
    Senior Member Yelta's Avatar
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    Quote Originally Posted by Avex View Post
    Your best bet would be to select a large specialty roaster (though that seems like an oxymoron to me) and simply chart their movement for a better idea of pricing for higher grade beans
    Charting retail coffee prices in OZ, green, roasted or cafe prepared would result in a pretty uninteresting graph (flat line) prices have barely moved in the past 10 years, with the exception of roasted, they had a dramatic jump a few years back.

    I understand the problems we face with the exchange rate, shipping and AQIIS charges etc, add to this economy of scale (we really are a tiny market by world standards) regardless of all of this I would have expected some price variation, I suspect there was a markup applied early on sufficiently large so as to allow suppliers to absorb fluctuations and still do very nicely.

    Most products rise and fall with changing market conditions, most, except coffee in OZ.

  10. #10
    Senior Member Journeyman's Avatar
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    I didn't notice instant coffee prices dropping in the supermarkets, and before about 6 months or so back, the Aussie dollar was rather high compared to $US or other currencies. The price of coffee has steadily risen across the years, with occasional big jumps when there's a news report of a hurricane in Columbia or similar.

    Last time I noticed (couple of months back) Moccona was at an all time high - it now sells on special at the price I used to pay for it at normal prices.

    Do you think the supermarkets would rip us off like that? *innocent look*

  11. #11
    Senior Member Barry O'Speedwagon's Avatar
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    Quote Originally Posted by Journeyman View Post

    Do you think the supermarkets would rip us off like that? *innocent look*
    No...they're more about screwing their supply chain, which is rather fragmented. Even the biggest baddie in the Supermarket lot earns a net profit margin of about 4% on Sales, and a gross margin of about 27-28%.

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    Quote Originally Posted by Yelta View Post
    Charting retail coffee prices in OZ, green, roasted or cafe prepared would result in a pretty uninteresting graph (flat line) prices have barely moved in the past 10 years, with the exception of roasted, they had a dramatic jump a few years back.
    i reckon commodities are treated as such for a reason, they have a pretty inelastic supply demand curve, and any fluctuations all occur in a relative short term to the point the affect on market prices will be close to negligeable over the long run. That ICEUS chart only goes as far back as 2009 or 2011, so if this isn't reflected in market price, i would attribute it to a simple case of cyclical fluctuations that normalise over the course decade long intervals or a lack of historical data.

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    Bumper coffee crop to cut prices further after three years of falls

    Coffee futures lost further ground this week, capping the longest run of annual declines since 1993, on concerns that a global glut will increase as crop conditions improve in Brazil, the world's biggest producer and exporter of arabica beans.

    Arabica coffee for March delivery fell 3.5 per cent to $US1.107 a pound on the ICE Futures in New York, the biggest drop since November 22. The price fell 23 per cent in 2013, the third straight annual decline. The commodity is now down 54 per cent since the end of 2010.

    Widespread rain in the next several days in Brazil's Sao Paulo and Parana states would aid plants by increasing soil moisture, MDA Weather Services in the US said.

    Brazil's crop is expected to reach 49.2 million bags (a bag weighs 60 kilograms), higher than a previous estimate of 47.5 million bags, according to Conab, the government's forecasting agency.
    Advertisement

    Global production is set to exceed demand for the fourth straight season, pushing inventories to a five-year high, the US Department of Agriculture says. The glut is helping to cut costs for US cafe chains, such as Starbucks and Green Mountain Coffee Roasters.

    ''There's just too much coffee around,'' said Michael Smith, president of T&K Futures and Options in Florida. ''A better crop outlook in Brazil is certainly pushing prices lower.''

    Global production, including the robusta variety that accounts for about 42 per cent of supply, would exceed demand by 6.04 million bags in the 2013-14 season, compared with a surplus of 11.06 million a year earlier, the US Department of Agriculture said. Inventories would reach 36.33 million bags, the highest since the 2008-09 season.

    Arabica, grown mainly in Latin America, is brewed by specialty companies, including Starbucks. Robusta, used in instant coffee, is harvested in Asia and parts of Africa.

    Robusta futures for March delivery fell 0.6 per cent to $US1683 a tonne on the NYSE Liffe exchange in London. The robusta price dropped 13 per cent in 2013 after climbing 6.3 per cent in 2012. Vietnam is the biggest producer, followed by Brazil.

    The arabica premium to robusta averaged US42.41˘ a pound in 2013, down from US84.16˘ in 2012.

    Read more: Bumper coffee crop to cut prices further after three years of falls

  14. #14
    TC
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    Sorta makes me sad to see this.

    So many of the people that help to produce it struggle to exist let alone have any luxury whatsoever and the big chains and roasters just exploit them.

    I'm glad that we don't purchase at this end of the price spectrum as I want growers and their staff to receive more, not less. We purchase accordingly.
    Last edited by TC; 2nd January 2014 at 09:19 AM. Reason: typolexia
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    Even here, it pays to be the guy who's had a good year when the others haven't.

  16. #16
    TC
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    Quote Originally Posted by MrJack View Post
    Even here, it pays to be the guy who's had a good year when the others haven't.
    I can't see how what sort of year anyone's had has anything to do with this?

    There are a host of individuals out there who believe that they "win" by screwing others over. In the case of green coffee, it's too often a choice of sell at a loss or starve. Those who enforce this type of sale should be ashamed of themselves. I don't know how they sleep.

    How about pay a fair price for mutual benefit and gain a little respect as part of the process instead?
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    Sorry, I was referring to the unfortunate irony of agriculture in the modern world. A good yield for everyone drives the price down, everyone has an ok year. A poor yield on average drives the price up - a shocking year for most, a good year for the lucky few who had good conditions and a good harvest.

    I wholeheartedly agree that farmers should be paid a fair price for their product (and that we should minimise middlemen as far as practicable).

    I did have a much longer post about the impact of short term profitability on the long term viability of a farm, but thought it was too 1st world centric. Unfortunately Tapatalk won't let you delete a post, hence I put in that short (needless) comment.
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  18. #18
    Senior Member chokkidog's Avatar
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    It's an unfortunate fact that the commodity price of coffee is set in New York and London by the ICO and the futures market controlled by
    the Intercontinental Exchange (ICE), formerly the New York Board of Trade, itself formerly known as the The Coffee and Sugar Exchange.

    The overwhelming consideration as to what the price might be is; the weather in Brazil (supply) and the 3 biggest markets in the world; USA, Germany, Italy, (demand).

    If there is a frost (especially) or drought, the price will go up as there is a perceived short term shortage in supply.
    If the weather has been good, no frost or drought, with plenty of rain, then supply will be considered adequate or in surplus and the low price will reflect this.

    Traditionaly, the commodity price has absolutely nothing to do with individual farmers, their costs of production or the economic sustainability of the
    coffee growing culture. Environmental and low impact agricultural practices haven't had a look in.

    Due to consumer market demands the ICO is now involved in some projects but these all revolve around certifications RFA, BF, UTZ, etc and not 'C' (or commodity) grade.

    There is no price input from any agricultural body, at any level.

    Commodity coffee prices are an absolute reflection of wilful 1st world ignorance.

    My sources:
    Some links to articles re frost in Brazil:https://www.google.com.au/search?cli...DwDA&gws_rd=cr

    and a historical chart here (and some links to interesting reading):International Coffee Organization - Frosts And Droughts In Coffee Areas In Brazil

    more links about pricing here: https://www.google.com.au/search?cli...FaON8QfBwYCIDA

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    For those who haven't, "Uncommon Grounds" has a good history of the price of coffee.

  20. #20
    Senior Member chokkidog's Avatar
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    Behmor Brazen - $249 - Free Freight
    The coffee price roller coaster ride.

    Overlay this graph with one of point of sale price for the end consumer.....................

    Daily Coffee News by Roast Magazine – Monthly C-Market Report: Prices Jump After News of Bad Weather in Brazil



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