insane...

topher

Super Moderator
Staff member
Aug 14, 2003
3,717
8
Boca Raton
I guess by this time everyone is freaking out about the coffee prices...it hit $2.51 yesterday and is at $2.50 now...when is the madness end???
 

lachris

New member
Aug 7, 2008
113
0
Kentucky
I posted a link on my facebook page (LaGrange Coffee Roasters) that shows the current and 2yr price graph...little feedback...I dont think people are aware of what specialty coffee roasters are facing right now. most retailers are trying to hold their 2009/10 prices and keep customers coming in...but I think it will hurt the retailers by doing that. Prices have to go up on the retail level if costs go up...oh, only if you want to stay in business...
 

wmark

New member
Nov 12, 2008
475
0
Canada
About a year ago I bought alot of packaging. The packaging prices have gone up substantially.
I think I am going to make more if I sell the packaging than on coffee.
I called my broker to do so but he told me that high barrier coffee packaging was not traded on the commodities market.

My investment advisor, Mr T., said "Pity the fool that is putting his IRA/RSP savings in a commodity fund"

Seriously though, I asked and am waiting for coffee price charts to see where the price is and if it has gone vertical yet. If so, I am waiting for it to come crashing back down before reinventorying.
 
OP
topher

topher

Super Moderator
Staff member
Aug 14, 2003
3,717
8
Boca Raton
  • Thread Starter
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$2.51?? I thought that was bad...closing Friday at $2.72! Any speculation on where it is going to end??
 

wmark

New member
Nov 12, 2008
475
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Canada
From what I have seen, all you can do is do a logorithmic chart and see where the vertical is. When it is vertical, all you can do is get out and stay out of the way until it comes crashing back down.

That said, if it is not vertical and you need beans...........well, I feel sorry for you. Actually, I feel sorry for me as I need some beans!
 

wmark

New member
Nov 12, 2008
475
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Canada
I was in Manizales, Colombia about 3 years ago (in the zona cafeteria or coffee zone), when the price of fertilizer had peaked. The farmers up there did not bother with their next crop as they could not afford fertilizer. In fact alot of farms were for sale for dirt cheap. Who knew that was the bottom.

A friend of mine did buy a business and tried to convince me to get into business down there.
Doing what, I don't know.

I guess it was one of those shoulda, woulda, coulda moments.

The other side of it, is that gringos on farms (living in isolation) with no protection end up being dead gringos. They think all gringos are rich. As a bandido, you go to where the money is. Heck, I know Colombians that get robbed as the bandidos think they have valuables by local standards, nevermind a rich foreigner.

I do know a person who has done it this way and another acquaintance that had done it this way.
One person (the acquaintance) lost everything but was allowed to leave with his life. The other had a good run as he was getting 'free beans' for a while, that is until he lost about 90% of his farm........and no he was not paid anythng for the 90%. (btw....neither one was in Colombia)





These are only mid day ramblings by me as I grow delusional sitting here drinking too much coffee. I should switch to rum as it would be cheaper.
 

wmark

New member
Nov 12, 2008
475
0
Canada
Despite what CNN says today

......borrowed from Heather Walsh, Bloomberg News

Colombian Coffee Group Sees ‘Very Good’ Crop in Main Areas

Colombia, the second-largest arabica coffee-bean producer, said flowering in recent weeks in major growing areas will ensure a “very good” year-end harvest.

Year-end production will rebound in the most important provinces of Antioquia, Quindio, Caldas and Risaralda, ensuring the annual harvest will surpass last year’s 8.9 million bags, Colombia’s National Federation of Coffee Growers Chief Executive Officer Luis Genaro Munoz said in an interview in Bogota.

“The production is there,” he said yesterday. “I frankly didn’t sleep until Friday. Friday and Saturday the flowering was completed” in the central growing areas, he said.

Above-average rainfall hurt coffee trees last year, prompting a decline in exports and a surge in prices. Coffee doubled in the past year, making it the second-best performer among 22 commodities tracked by the Bloomberg CRR Futures List.

Arabica coffee for May delivery gained 1.35 cents, or 0.5 percent, to settle at $2.7435 a pound at 2 p.m. on ICE Futures U.S. in New York. The price earlier declined as much as 2.65 cents to $2.7035.

Production in Huila, Colombia’s second-largest growing province after Antioquia, will rise in the first six months of the year, Munoz said. Huila, which produces beans brewed by companies including Starbucks Corp., and other nearby growing areas had less severe rainfall than areas farther north, where precipitation in some cases was four times average last year, Munoz said.

Stalled Recovery
Damage in those areas to flowering last year will cause a recovery in the nationwide crop to stall in the first half, he said.

Colombia aims to increase production as it accelerates plans this year to sow more disease-resistant coffee varieties, Munoz said. A disease caused by fungus, known locally as roya, that attacks plants probably peaked last year, Munoz said.

Last year, exports slid by 78,000 bags to 7.82 million bags. Output in 2010 fell short of the 9.5 million bags forecast in October by the federation. A bag weighs 60 kilograms (132 pounds). Brazil is the largest producer of arabica beans.
 

wmark

New member
Nov 12, 2008
475
0
Canada
I also looked at the appropriate commodity price chart for coffee prices.

IF this behaves like a traditional bubble,

This price run started in June 2010, and while steep (and painful for us) looks like they can still rise dramatically, generally the blow off phase. How high it pops or how far it falls, who knows ?

One thing we were discussing, is that price futures are divorced fromt he reality of the prices paid to farmers. As mentioned before it may have to do with something bizarre like the funds from IRA's (south of the border) and RSP's (north of the border).
 

wmark

New member
Nov 12, 2008
475
0
Canada
In this time of high coffee prices, I may as well rant about another pet peeve of mine.

How many of you bother to measure (by weight) your beans upon delivery ?
If you don't it means you don't know what you received.

You paid for 70 kilos but what did you get ? Was it 70 ? 69 ? 68 ?
Wait !!!!! if they are within 1% of the stated weight, they claim to be under no obligation to recompense the consignee.


I bring this up because I was involved in another industry that delivered bags of raw materials that the consignee had assumed/trusted that as was stated. Because of new equipment purchases we gained the ability to determine exactly what was delivered. That ability gave us insight as to how much we were short shipped. Over a year, that worked out to a tremendous amount of money.

I see the same issue now with green coffee beans.
 

wahoo coffee

New member
Apr 19, 2005
19
0
cocoa beach, fl
This is an email I received from Royal NY last week....


Prepare for the worst and hope for the best…….

As the market continues its seemingly daily ascent, we are faced with increasing concern for a $4 or even $5 market. We don’t subscribe to the role of alarmists, but for the sake of industry-wide preservation it is imperative to convey the prospect of even further price increases to your customers. We have had more than a few inquiries as to the best course of action to take. Before arriving at a solution, let’s first look at the developments over the last 9 months:

June 2010: the market starts its break out from the $1.35 level
February 2011: the market is within striking distance of the $3.00 level for the first time since 1997.
Currently: the May futures contract is trading near $2.77.

Taking a page from the big boys…..

Cumulative Retail increases since May 2010:
Folgers - 23%(issued in 3 increments: May 18/Aug 3/ Feb 8/????)
Maxwell House - 26%(issued in 3 increments: May 21/Aug 6/ Dec 15/????)


You want to talk to your wholesale customers primarily about the current increase you may need to issue, but more importantly about the strong possibility of further increases down the line. The coffee industry has experienced relatively low prices for many years where a wholesale price increase was perhaps a ‘once in a 3-year period’ event (e.g. coffee traded as low as 41 ½ cents in 2001!). There is clearly a seismic shift in the market which will reveal those consumers who will embrace quality, those who are more price-driven, and many who lie in between.

I was talking to a customer the other day who said, “I was concerned for a long time about issuing a price increase & how it would be received. My concern is still there, but I would much rather have 50% of my wholesale accounts at a profit than 100% at a loss……”

Carpe diem,
Jaime
 

wmark

New member
Nov 12, 2008
475
0
Canada
Not all prices are created equal. Prices from my direct trade source/group is far more reasonable than from the coffee brokers.

I hope to eliminate the middleman for some of the coffee by the end of this year/beginning of next year. Well see what happens.......until then, I have the privilege of getting bit in the ass.
 

wmark

New member
Nov 12, 2008
475
0
Canada
Is anyone else as confused as I am about coffee prices ?

Was talking to a coffee farmer and as a farmer he was telling me about his dread of the bust in the market that is sure to follow this boom
 

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