Arabica coffee is the premium
bean relative to Robusta, but in the last year premium prices have fall 30 percent
versus increases in Robusta based on demand shifts. Coffee prices doubled between 2010
and 2011 only to see a major adjustment in the last year.
Coffee demand is still
growing about 2.5%, but the growth has been in lower income markets and not the
developed markets which have seen demand declines between 2 and 6 percent. The developed world is where there is a stronger demand for Arabica. This demand decrease does not seem like a lot, but when there is a new supply coming on line and the
market was prepared for higher growth, there will be a price shock. Price is a rationer. When price levels are high, demand will adjust. The effect may not be immediate but consumers will adopt to suit the market situation.
No comments:
Post a Comment