Lost in the delicious morning cup of Java is that coffee is actually produced the goods. Although often viewed as a very traditional drink - the forms are dated literally thousands of years - there is always an interesting news surrounding material. Innovation, commodity prices, corporate branding, and other factors combine to make the ever-changing world of coffee that surrounds it can be many things, but it is rarely boring. Here is a look at how coffee has acted as a commodity over the past year:
It would be a simplification to say that coffee prices determined by supply and demand for the product. While this is absolutely true, many factors can affect both supply and demand, then the price of the product. Most of the world's coffee beans come from just a few countries. This means that a relatively small micro-world problems can wreak havoc on the world's total cost. These problems may include, but are not limited to, weather patterns, geological events, new brands available in the market, the average temperature in the consumer market, the prices of petroleum products, the prices of other breakfast drinks, etc, etc, etc. For example, poor crop oranges in Florida could lead to unexpected price of orange juice. As a result, many people drink orange juice to switch to coffee for their morning intake. This increased demand is pushing up coffee prices as well. In fact, these two products are linked to the point that old trading adage, "Never be short orange juice go in January or coffee going in July ."
World coffee prices have risen dramatically over the last year. In August 2010, coffee was sold in the futures market for about $ 250 per unit (with a variance depending on the day). In August 2011, the price has risen to about $ 270 per unit. This represents 8% more than in that stretch. While this seems like a pretty dramatic increase, it should be noted that the market as a whole (using the Dow Jones Industrial Average as a base), increased by 9% over this range. As such, the price of coffee has actually risen more slowly than the market as a whole. This does not mean much to individual consumers who have seen the price of products based on coffee growth - both in the supermarket and cafes because they did not see 9% increase in money supply or their own salaries. While this should, theoretically, less demand to the point where it brings the price of coffee back into line with those typical of the goods, it did not happen. Instead, it seems that the coffee is so popular that consumers are willing to meet higher prices than to find other sources of caffeine for the morning.
Although many people drink coffee or want to blame the producers for what they spend on Java, it is interesting to note the total price of beans and track that against the price at checkout. As is often the price of drinks is determined before the beans come from plants.
