Market Highs

Market Highs

You may have heard that coffee has reached an all-time high in the commodity markets. I don’t want to write this in a way that should make you panic. We have an economic storm of sorts, even though coffee prices are retreating a little.

The two biggest coffee-producing countries have had smaller harvests. Vietnam has started to diversify away from coffee, to a degree and Brazil has had droughts and a low harvest. This has been followed by wet weather and a question over flowers on the coffee trees maturing into fruit next year. Some commercial players have been buying big, which has propped up the forward price too. This, alongside new legislation regarding traceability and currency weaknesses, it is a complicated mess!

How does this affect me?

I have read and heard a lot of pointed protectionist articles from others in the business on this subject. As a James Gourmet Coffee customer, things will carry on as normal and we will remain to work on an amount per kilo not a margin, which means that your prices won’t go skywards like the commodity graph.

All that has really happened is that the base price for raw coffee has increased. We won’t know how long the increases will last and how much they will be for a full year, as a starting point. Coffee contracts only happen overnight when there is certainty and “calm waters”.

Long Term View

On our radar, we need to remember that coffee consumption is increasing throughout the world. Developing nations have bigger budgets than ever before and the highest quality coffee will go to those bidders.

Our strategy is working on and maintaining meaningful relationships with enough producers to ensure plain sailing.