Coffee prices hit 10-year high

This week, the coffee market has the highest prices in about 10 years and it doesn't look like this increase will come to a quick stop soon. 

The Arabica coffee prices soared, approaching the highest numbers in almost a decade, because of signs of shortages in top producing countries like Brazil and Colombia. The price for conventional, better known as commercial, (arabica) coffees are based on the C-market price plus the Dollar/Euro rate. 

Here are some screen shots of last week's situation of the market, so you can clearly see how it evolved over the last years.

On top of that, we notice much higher shippingprices and a longer lead time. Does this mean we also have to increase our beans prices? 

Yes and no. 

The big guns like Starbucks, Nestlé, Douwe Egberts or Belgian companies like Beyers, Miko or Rombouts, are buying, almost exclusively, commercial coffees. They pay very low prices for these beans.

You can taste this in their cups, but it also makes them receptive to a volatile market like the coffee market. For some companies the prices double and their profits are under pressure. 

Then we have the Specialty coffee companies. In this case you can see a couple of differences in style. For all direct traders there's little increase. 

The conventional way of working when buying direct is that you pay for quality and on top of that you support the farmer(s). This has nothing to do with the markets mentioned above. You can see that most of the countries are having a strong inflation and that shipping also became much more expensive.

In total you're probably just talking about a 5 to 10% increase though.

At Caffenatin we go to some countries to buy (semi) direct, but we always work with exporters; helping us with lot selection, paperwork and shipping. The price setting is the same as with Direct Trade, so little changes here. 

We buy a lot of coffee for different purposes.

For our most commercial coffee, the Roast ED, we're fishing in the upper conventional market and the lower specialty market, so there we have up to 25% increase in price. 

Luckily we have, based on experiences in the past, good long term contract. We've invested a lot of time in searching the right coffees, so we didn't have to raise prices yet, but will go up 6% at the beginning of 2022.

Our Sugar Cane decaf and the (new) Brazil IAN went up already mid December, around 5%. 

The other specials are not that sensible to market changes and in this case we work very seasonal; prices go up and down based on quality, lot size and the dollar future.

We never have fixed prices for these coffees, so fluctuations are always happening and recent changes are less visible.  

We don't know what's going to happen in the future, but one thing is almost certain; not many companies will have price decreases once the market prices slide back down. The less profit now, the bigger (long term) profits in the future, so don't feel sorry for them. Overall it's a good thing the markets went up, so a bit more dollars for the hardest working people in our industry; the farmers.