Last week Crikey asked why Australian gas prices were not reflecting the fall in world prices, especially for liquefied natural gas. This week we ask why the price of Australian coffee, which has risen sharply this year with the spike in global prices and energy costs, hasn’t reflected the 25% plunge in the past month.
World prices are based on the New York coffee futures market. Last Friday the December cash coffee futures price for Arabica beans fell 5.1% to US$169.8 cents a pound — the lowest since July 2021. The price of Robusta beans fell 1.7%.
For the week, Arabica closed down 11.05%, the steepest weekly decline in two years. That’s a fall of 24% over the past month since a peak of $US2.43 a pound. Meanwhile, Robusta hit a 14-month low, closing at $US1.849 a pound on Friday after hitting a high of $US2.39 a pound in late August.
According to commodity analysts, the big drivers are La Niña and a negative Indian Ocean Dipole (essentially cooler sea surface temperatures in the western Indian Ocean, relative to the east). This combination has given much of Australia its seemingly incessant rainfall this year — it has also meant a lot of wet weather in Brazil’s coffee-growing areas, but crucially not too much.
This wet, mild weather means no early cold fronts or hail storms or early freezes. December is another problematic time, but if this weather continues, Brazilian beans should survive winter. Will this price fall flow into our cafes?
Once we get used to paying the high price on coffee, I can’t imagine it falling again. Consumer expectations determine what price cafes can sell at, so I’ve we all get used to paying $5-$6 for a coffee, only competition can help drive it down. We’re so abstracted from the costs of doing business that this news might as well not exist.
The cost of the actual coffee in your $5 coffee is probably what ? 30 cents ?
Hey, barista tatts aren’t cheap!
I’d be surprised if the Barista was getting much more than 50c a cup unless he was also the proprietor.
But even if you buy beans, the price has never fallen.
My local coffee guy is complaining about the recent pay rise for his staff. Its going to cost him an extra $500 per week. He also changes a fee for payment by credit card, one of many backward retailers still doing that, as well a premium price of $6 per cup. A lot for this area.
I cant see him dropping prices ever for any reason.
What? You actually expected prices to go down? you’re dreaming!
Not all coffee comes from Brazil. How are the producers in other countries faring?
It’s not the only country, but it is by far the largest producer of arabica coffee. Produces more than 3 times the next largest (Columbia) and more than 5 times the third largest (Ethiopia).
In tyh bad ole daze before globalisation made everyone richer, happier and smarter, Brazil would react to overproduction of coffee by using the dried beans to fire train boilers.
I’ve bought my coffee from a producer from Byron Bay for the last 25 years. The price has steadily increased over the years but the taste is so good that we rarely go out for a cup… we stay and home and fire up the Jura.
They’ve got an awful lot of coffee in Brazil