"Well, everybody blames everything on speculators these days but...
Brazil's next crop will be about 43 million bags. They used to export between 25 and 30 million bags but now internal consumption is between 20 and 21 million bags so they don't have as much to export. In addition it has been more profitable to grow cattle than coffee in Brazil in recent years so plantings have decreased in the last few years.
World consumption is up and world production has leveled off somewhat, and the "overhang" of 10 million bags which used to be in warehouses from year to year is no longer there so the market is more volatile. That said, we have no idea whether the price will continue to go up, stay about this level for some time or fall back. We believe that something over 70 % of futures contracts are now held outside the industry ( by "speculators") and so the needs of the roasters no longer control the direction of the market. If I could predict the coffee "C" market I'd just get it right once or twice and retire.
Commodities have all increased in price both because of increasing demand and because governments are printing money (see 800 billion dollar bailout/stimulus) which makes money less valuable and commodities, whether gold and silver or corn and coffee, pricier. World demand for food is increasing faster than production, so prices are being pushed up, and the increasing demand for quality coffee may be boosting the high end of the market. Certainly differentials to the "C" market have increased over the last year.
Finally I like to tell people that the best coffee in the world might cost 1.50 per cup to brew at home (RSW Estates Jamaica Blue Mountain) while a bottle of 1982 Chateau Petrus will set you back $ 2400 bucks for 8 glasses, and those only 3 ounces apiece! "
- John Rapinchuk, Knutsen Coffees
0 comments:
Post a Comment