27% of all coffee imported into the US enters at New Orleans and is warehoused there prior to distribution.Originally Posted by Andy Freeman link=1125962018/0#0 date=1125962018
Fortunately we are between harvests and so there shouldnt be a huge stockpile of beans in New Orleans. What is there however is most likely ruined. There have been reports that the largest coffee warehouse in New Orleans was flooded and its contents ruined.
The outlook for coffee on the world market actually looks pretty good as oppossed to most other commodities.
There will be an immediate spike in coffee prices accross the board for all types as people attempt to replace the stock lost in New Orleans which will cause an increase in bean prices. This is especially true currently as there are relatively small stockpiles of beans sitting around due to the higher prices farmers have been getting (so they sell rather than sitting on the beans) and the shortages from the 2 biggest growing countries (Brazil and Vietnam) due to drought.
Thats the bad news.
The good news for those outside of the United States is that this is a temporary increase.
Other than a small amount from Hawaii the US imports all of its coffee with very little of the rest of the worlds coffee passing through the US. Katrina had little impact on any coffee growing region. Because of this once the stock lost in New Orleans is replaced, which should coincide with the big fall harvest, coffee prices should return to normal at the source level.
In the US its a different story however. The loss of the big stockpiles of beans in New Orleans has already led to significant price increases with more expected to follow. Prices will also remain high in the US even once the lost stock has been replaced due to higher shipping costs for the beans that normally enter the US in New Orleans. They will now have to be shipped to the east or west coast to existing coffee storage facilities or new facilities will have to be built in another Gulf port as neither the port of New Orleans nor the storage facilities there will be usable for months.
So, the direct impact of Katrina on coffee prices world-wide will be pretty short lived, with the only long term effect being an indirect one via higher oil prices and hence higher shipping costs. This indirect impact of Katrina will be felt world-wide for virtually every commodity and good for some time to come.
So on the coffee front the world is sitting pretty good as far as any effects from Katrina. However, odds are we will not see prices fall by very much once the short term effects of Katrina is over. According to the last estimates Ive seen theyre still predicting a 20% reduction of the harvest in both Brazil and Vietnam in the upcoming harvest. This coupled with the increase in the price of oil virtually guarantees that there will be little easing of coffee prices for at least the next 6 months and possibly not for a year or longer.
This would be a good time for all the roasters out there to build up their stockpile of beans before the price increases reach them.
Java "Pets his stockpile of beans" phile