Friday, April 27, 2012

A Peek into Coffee Prices

As many people who have followed the coffee industry know; coffee prices have recently been on the rise. This has affected the price of the coffee that is being bought. Recently James Hoffman posted some graphs that I think might help give you an idea of what's going on in the industry.

The commodity price of Coffee

This graph does not show how much we are paying for coffee, since we buy our coffees primarily through direct trade relationships, however it is a good indicator of where the coffee market is going.


As you can see coffee prices peaked about a year ago,
but have still remained much higher then they were back in 2003.

The commodity price of Oil

This graph shows the price of Oil over the last decade or so. Oil also factors a great deal into the price of coffee. It costs money to transport coffee from the farm to the roaster. It costs money to transport the roasted coffee to the coffee shops that buy coffee or the stores that stock it. Oil is a very important part of the equation as well.


As you can see the price of oil dropped just as the price of coffee began to rise. As a result even though the price on coffee has begun to stabilize somewhat I don't think we will be seeing any reduction in the cost of coffee any time soon.
I would love to hear any opinions you might have on the matter. I personally think that the price of coffee right now is in a good place. It gives the farmers the kind of money for their product that organizations like "fair trade" have been trying to create for decades. The real thing to worry about in the future might be the cost of energy. What do you think?

2 comments:

  1. Any idea how much of the commodity price actually gets into the hands of farmers? I imagine more goes to middlemen and coyotes who don't/won't pay the farmers what the coffee is actually worth. Is this happening or am I just being pessimistic about the coffee industry (except for relationship coffee, of course)?

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  2. Is the idea that because oil prices dropped so dramatically, traders began to look to other commodities to maintain profits? This would obvious increase demand of coffee (the second highest (in dollars) traded commodity in the world) without changing supply, thereby driving up the price.

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