Price of Raw Coffee on Commodity markets

Readers Question: How is the market of raw coffee determined  on the world commodity markets?

The price of raw coffee is determined by the basic principles of supply and demand.

coffee-price-paid-to-growers-colombia

Demand for coffee beans will be largely determined by the large coffee firms such as Nestle and Kenco. In turn their demand depends on the consumer demand for drinking coffee.

In recent years the demand for coffee has been increasing because:

  • Coffee has become a more fashionable drink with an explosion in the number of specialist coffee houses, such as Starbucks and Cafe Nero.
  • Coffee is increasingly seen as an alternative to alcohol, as drinking during lunch becomes less common.
  • Rising incomes, is increasing demand for specialist coffees.

However, rising demand is not guaranteed to increase price because it also depends on supply.

Supply depends on :

  • Number of firms / countries producing coffee
  • Productivity of coffee growers. e.g. improved planting techniques can increase yields.

Short Term Fluctuations

In the short term the price of coffee can fluctuate due to changes in the weather and disease. Coffee is quite a volatile commodity. Because demand for coffee is inelastic, a small change in supply can lead to a big change in price.

inelastic-demand-volatile-prices

Buffer Stock Schemes

With commodities such as coffee, governments have tried to stabilise the price of coffee with schemes such as buffer stocks. This involves setting supply quotas and purchasing excess supply to prevent prices falling. However, with so many countries producing coffee, buffer stocks are difficult to implement. This is because smaller producers may take advantage of the restriction in supply to increase their supply.

Coffee prices and production

coffee-retail-price-production

Coffee production and coffee retail prices.

coffee-supply-price-growers

Price received by Colombian growers Cents / per lb.

Related

By on June 23rd, 2015

7 thoughts on “Price of Raw Coffee on Commodity markets

  1. hello
    good days
    I wnat to knowe how much the price of 1 kg of raw coffee is.would you please help me?
    we want to import coffee for processing it.
    thanks for your cooperation

  2. I want to know the real cost of organic raw green bean Arabica coffee in the US market. I do have stock more than 150 tonnes. Please seriously looking buyers and good price of it.
    Harka

  3. Hi
    i have reserve of raw coffee and i want to sell it to you. Please try tell me the price and how to deliver it to you.
    Anyone interested can contact me.

  4. hello
    good days
    I wnat to knowe how much the price of 1 kg of raw coffee is.would you please help me?
    we want to import coffee for processing it.
    thanks for your cooperation

Leave a Reply

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