[HN Gopher] Global coffee trade grinding to a halt, hit hard by ...
___________________________________________________________________
Global coffee trade grinding to a halt, hit hard by brutal price
hikes
Author : speckx
Score : 80 points
Date : 2025-03-09 18:19 UTC (3 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| 0_____0 wrote:
| This isn't tariff related.
|
| Per NASDAQ:
|
| > Below-normal rain in Brazil has heightened coffee crop concerns
| and is supporting coffee prices after Somar Meteorologia reported
| Monday that Brazil's biggest arabica coffee growing area of Minas
| Gerais received 12.4 mm of rain last week, or 20% of the
| historical average. Brazil is the world's biggest arabica coffee
| growing country.
| ericjmorey wrote:
| It's climate related.
| ChrisArchitect wrote:
| Recent NYT piece of interest:
|
| _Coffee Prices Are at a 50-Year High. Producers Aren't
| Celebrating._
|
| https://www.nytimes.com/2025/02/22/business/coffee-prices-cl...
| criddell wrote:
| Coffee YouTuber James Hoffman makes a pretty convincing argument
| that we are living in the golden age of coffee. Lots of excellent
| coffee and it's pretty affordable. But he thinks it could end
| soon.
|
| Everybody knows that climate change could be a problem, but he
| says an even bigger problem is urbanization. The average coffee
| farmer's age is 50-something and their kids don't want to take
| over the farm, they want to move to the city. The people who are
| willing to work the farms, want to be paid a lot more, so there's
| upward pressure on prices.
|
| Right now cafes can charge $4-$6 for a coffee drink and people
| seem to be willing to pay it. As coffee gets more expensive, how
| many people are willing to pay $6-$8? For a lot of cafes, it
| won't take much of a drop in business to kill them.
| glitchc wrote:
| Nah, coffee can go to $12 a cup and people will still pay. We
| will see corporations subsidize the cost for their workers as
| necessary.
| woleium wrote:
| Don't they do that already?
| yapyap wrote:
| I mean let's be honest, coffee will rise to 6-8 bucks either
| way cause of inflation
| ericjmorey wrote:
| Corporate agriculture will buy up the land and find ways to
| produce at a profit.
|
| Starbucks regularly charges $15 for coffee flavored drinks
| today.
|
| I'm not worried about coffee. I'm worried about climate induced
| resource wars.
| standardUser wrote:
| I've been able to buy a pound of high-quality whole bean coffee
| for $15-$20 for about 20 years now. I assumed the cost at cafes
| had more to do with labor and rent.
| 9283409232 wrote:
| I swear most cafes I've been to are already selling coffee for
| $6-$10.
| paxys wrote:
| The cost of coffee beans in a standard espresso drink is ~25
| cents, and that's if you are brewing ultra high-end $15-20/lbs
| beans. Raising the price of the beans by 15% or 30% or even 50%
| isn't going to make all that much difference to margins when
| the end product retails for $4-6 or more.
|
| The coffee shop business is only tangentially related to
| coffee. Whether you will be successful or not depends more on
| location, labor, branding, interior decor, music, bakery, food,
| upsells..
| TZubiri wrote:
| I think there would be magnifying effects, but possibly in
| the opposite direction.
|
| If coffee becomes more expensive, buying a bag of coffee for
| your home and being terribly inefficient with doseages and
| such would not be so viable.
|
| If coffee houses can maintain price relatively stable they
| become much more viable. Especially since the other cost
| factors can keep coffee consumption in check.
| criddell wrote:
| $15-$20 / lb is not ultra high end. That's the normal price
| for beans from most roasters. High end is around $40 / lb and
| ultra high end is much more.
| kneath wrote:
| Might want to check your math there. At $20/lb, zero waste
| (!!), 18g of coffee is $0.80/shot. Add in 10-15% waste
| (accurately predicting exact supply of beans is almost
| impossible, plus dialing in, mistakes, and training) and a
| more standard 22g basket, you get $1.12 per drink.
|
| Aiming for 25% COGS, that pushes up the price of a cup to
| $4.50 before milk, syrups, cups, etc. If the cost of coffee
| doubled, you'd be looking at the cost of coffee only being
| 38% COGS for a $6 drink. That kind of increase is not only
| going to completely remove all margins, but likely put you in
| the red per drink served.
| paxys wrote:
| There is no "standard 22g basket". Regular 8-12 oz drinks
| at most coffee shops have a single 7-10g shot. Double shots
| and larger sizes always cost more.
| TZubiri wrote:
| I'd take that chance to (slowly) quit coffee. Possibly go into
| lower caffeine beverages like tea.
| yabatopia wrote:
| Not a big deal. Coffee is not a necessity. The coffee
| monoculture is devastating for the environment. Most small
| coffee farmers and plantation workers don't earn a livable
| income. Only 10% of the retail price of coffee goes to farmers.
| The whole industry is exploitative.
|
| Don't drink coffee. It's that easy.
| Yeul wrote:
| That's because coffee farmers don't make any money it's all
| going to Western corporations.
| mdasen wrote:
| It seems like there was lower coffee production so they hiked
| prices due to the more limited supply. It also seems like they
| hiked prices too high with suppliers saying that they've only
| sold 30% of their production when they'd normally have sold 100%
| by now.
|
| It does kinda show how markets don't just magically hit an
| equilibrium price. The prices went up due to limited supply, but
| then the sellers couldn't sell at those higher prices.
| Negotiations over price aren't going fast and buyers are only
| buying what they can immediately use/sell.
| ericjmorey wrote:
| Sellers will start holding more inventory. and wait for buyers
| to run through theirs.
| 0_____0 wrote:
| I'm curious to know from someone who understands better- isn't
| this the kind of volatility that futures markets are intended
| to prevent? If actual product movement has changed
| significantly then is it just that this moment is especially
| volatile, or are futures as a mechanism not particularly meant
| to deal with this?
| woleium wrote:
| That was always touted as a reason, yes. I am sure it is
| partly true, within certain bounds.
| shermantanktop wrote:
| Futures aren't _meant_ to do anything, are they? Like so much
| of the market, they are just another partial-information
| lottery which isn't explicitly forbidden by weak regulators.
|
| (But I'm not someone who knows better)
| jgalt212 wrote:
| futures markets (among other things) allow producers to
| temporally match assets and liabilities.
| Marazan wrote:
| Futures market started as a way of (and in America were
| strictly limited to) prpducers and wholesale buyers to
| hedge/fix their costs.
|
| Then American regulators started handing exceptions to
| allowable market participants out like candy and suddenly
| the markets are majoritarily financial middlemen who do not
| want to take delivery.
|
| Futures markets make lots of sense and are very useful. How
| they are currently constituted does not.
| jgalt212 wrote:
| > It does kinda show how markets don't just magically hit an
| equilibrium price.
|
| There's lot of research on situations where market prices fail
| to work, but not much (as far as I'm aware) of when they
| largely work, but there are times when the market seizes up
| (and how to avoid such situations). or do the risk of such
| situations are so great that a product should not a be allowed
| to have a truly "free" market. e.g. petroleum.
| fsckboy wrote:
| it's difficult to impossible to believe that there is any
| failure currently in the international coffee market. (i'm
| replying as much to GP as to you, not disagreeing with you)
|
| > _markets don 't just magically hit an equilibrium price_
|
| markets do magically, and quickly, hit a "market clearing
| price" where all the bids and asks that match are executed.
| the market can also slow when there are plenty of bids and
| asks but they are too far apart.
|
| an "equilibrium price" seems to imply some sort of stability,
| but when the future is uncertain, prices will be uncertain,
| without implying a market failure. there can be "information
| failures" that steer prices wrong, but prices can be
| uncertain just the same even given all current information.
| crazygringo wrote:
| > _It also seems like they hiked prices too high_
|
| How is that even possible?
|
| > _It does kinda show how markets don 't just magically hit an
| equilibrium price._
|
| Generally, markets _do_ "magically" hit that.
|
| Can you explain why, at the moment demand dried up at the
| higher price, the suppliers didn't immediately drop the price
| to meet demand? That's generally how these things work.
|
| Unless there's some kind of cartel operation at play here. In
| which that's to blame, not the market.
|
| Can you provide any links with greater detail?
| vasco wrote:
| Whenever someone says the market doesn't work it's just
| because it's not doing what they think it should, as if
| there's some pre-ordained magical prices.
| hedora wrote:
| I was wondering how it's possible too. The article mentions
| this exchange:
|
| https://www.ice.com/products/15/Coffee-C-Futures
|
| My take:
|
| Futures traders decided the price would go up 70%, and were
| very wrong. This led to the standard "C" contract (set by the
| ICE exchange) price being too high, tanking demand. If you
| want to participate in the futures market, you need to have a
| license you get from the exchange.
|
| I'm sure some producers will try to bypass the exchange
| market that manages all that, but, ultimately, someone will
| have to lose a bunch of money. It'll either be the traders
| (futures contracts end up being worthless) or the producers
| (coffee ends up rotting or being refused by the silo).
|
| The article suggests it's the latter, which makes me wonder
| how powerful the exchange is, and what happens if you just
| start freighting bags of coffee around.
| crazygringo wrote:
| So why is an exchange setting a price at all?
|
| That's not how exchanges generally operate. They generally
| simply match supply and demand.
|
| An exchange setting prices is the literal opposite of a
| free marketplace. Is this more of a cartel, like OPEC?
| yapyap wrote:
| This is cause the harvests were fucked
| pingou wrote:
| "They don't know if they will be able to sell their product at
| the new prices," he said, also asking not to be identified. "Some
| people are going down".
|
| That's surprising to me, considering that coffee is quite
| addictive. Will consumers really stop drinking it if it gets too
| expensive? Is there a really a strong correlation between coffee
| production price and the amount sold to end consumers?
| acchow wrote:
| Inventory along the distribution chain will take quite some
| time to draw down before people are actually drinking less
| coffee.
|
| As for caffeine, there are cheaper alternatives to coffee if
| you just want the caffeine.
| cardiffspaceman wrote:
| My personal experience is that my withdrawal symptoms are not
| that bad. I used to pause my coffee consumption when the
| euphoria significantly diminished.
|
| I hope someone can authoritatively answer the correlation
| question.
| Marsymars wrote:
| > That's surprising to me, considering that coffee is quite
| addictive.
|
| I'm not sure that it really is. You can build a physical
| dependence to caffeine, but in my experience there's no
| mentally addictive component. For a period of time I drank a
| lot of coffee and then stopped cold turkey, and the only effect
| was a couple days of physical unpleasantness. I now limit my
| coffee consumption to a max of one cup per day, and have no
| issues switching between coffee/decaf/no coffee on any
| particular day or for any arbitrary period of time.
| beautifulfreak wrote:
| No one has mentioned China's uptake of coffee drinking, or their
| long term contracts with coffee growers, buying up whole crops.
| https://www.youtube.com/watch?v=_aR4RCqw-gg
| cantrecallmypwd wrote:
| I wonder how this affects small, subsistence farmers in PNG.
| Freak_NL wrote:
| In 2021, the extra large 1200 grams pack of coffee beans cost
| EUR6,50 at the Lidl in the Netherlands. This month you probably
| won't find any at the Lidl (not in the ones near me in any case).
| Other supermarkets have similar empty shelves due to a conflict
| with the biggest brand name supplier (JDE Peet's), and what is
| available costs perhaps EUR10 per kilogram for some of the
| remaining supply, but EUR15 per kilogram is now the normal price.
|
| One factor sometimes mentioned in addition to the bad harvest, is
| the rise in coffee consumption in China having an definitive
| impact on the market.
| dboreham wrote:
| This prompted me to re-order my 20lb bag of green beans early
| this year. Looking back at my order history the price has been
| the same ($129) for the past four years, but now is $134. Not
| exactly a steep rise, but more than zero.
| eterps wrote:
| I've switched to a 50/50 blend of regular coffee and coffee-free
| alternative from Northern Wonder (https://northern-wonder.com).
|
| I combine 50% traditional coffee beans with 50% coffee
| alternative made from locally produced beans in my espresso
| machine.
|
| The blend works so well that I have no desire to return to using
| 100% regular coffee beans.
|
| I maintain the 50/50 ratio because real coffee provides an
| incredible aroma that I don't want to give up (for now).
| openmarmot wrote:
| I roast around 15 pounds a year. I noticed prices have gone up
| 1-2 dollars/pound at my main supplier (sweet marias). The average
| is now about $8.5/pound. That is a price I'm still comfortable
| with.
|
| At my consumption level so far the price changes haven't been a
| big deal. It could be that high end beans haven't been as
| affected - or maybe that was the 'brutal' price hike.
___________________________________________________________________
(page generated 2025-03-09 22:01 UTC)