Price of raw coffee in commodity markets

Readers question: however is that the marketplace for raw occasional determined within the world trade goods markets?

The price of raw occasional is decided by the fundamental principles of offer and demand.

The demand for coffee beans will largely be determined by large coffee companies like Nestlé and Kenco. In turn, your question depends on the coffee consumer demand.

In recent years the demand for coffee has increased because:

  1. Coffee has become a more fashionable beverage with an explosion in the number of specialized cafes, such as Starbucks and Cafe Nero.
  2. Coffee is increasingly seen as an alternative to alcohol, since drinking during lunch becomes less common.
    Increase in income increases the demand for specialty coffees.
    However, it is not guaranteed that the increase in demand will increase the price because it also depends on the offer.

The supply depends on:

  1. Number of companies / countries that produce coffee.
  2. Productivity of coffee growers. for example, improved planting techniques can increase crops.

Short Term Fluctuations

In the short term, the price of coffee may vary due to climate change and disease. Coffee is a fairly volatile product. Since the demand for coffee is not elastic, a small change in the offer can lead to a big change in the price.

Damping action schemes

With products like coffee, governments have tried to stabilize the price of coffee with schemes like reserve reserves. This implies the determination of supply quotas and the purchase of an excess bid to avoid falling prices. However, with so many coffee producing countries, regulatory stocks are difficult to implement. This is due to the fact that smaller producers can benefit from the limitation of the offer to increase their offer.

Prices and coffee production

Coffee production and retail coffee prices.

Price received by Colombian growers Cents / per lb.

Leave a Reply

Your email address will not be published. Required fields are marked *