Supply and Demand in World Coffee Prices

So many different factors affect the price of coffee beans or a cup of coffee that it can easily confuse a human brain or the most sophisticated supercomputer alike. The weather in coffee growing countries. Political unrest in coffee growing regions. The world economy and balance of trade. Deliberate overproduction by the coffee growers of a nation or a region to grab more market share. Deliberate underproduction by coffee growers to create a scarcity that drives prices up. Speculation by investors. The latest trends in coffee bars or home coffee makers.

Each such factor, and many more, may or may not make the price of coffee go up or down.

Coffee is bought and sold as a commodity on worldwide markets, just as investors trade oil or rubber or any number of other in-demand products. Investors can buy and sell coffee futures—that is, speculating on the price of coffee crops yet to be produced or delivered. To help regulate and stabilize coffee trading worldwide for coffee producing nations, the International Coffee Organization was formed in London in 1963, and to date it has administered six successive International Coffee Agreements, the most recent dated October 1, 2001. Today, ICO member nations account for more than 97 percent of world coffee production

Fluctuation and Stability in Coffee Prices

Such regulation, however, does not necessarily bring stability to the price of a pound of coffee beans or a cup of coffee. For example, in the mid-1970s, the loss of millions of Brazilian coffee trees to frost and political upheaval in Africa led to a worldwide coffee shortage and a related rise in coffee prices. In 2004, dramatic increases in coffee production in Brazil and the introduction of coffee crops from new coffee-producing nations like Vietnam led to a corresponding drop in coffee prices—and some relatively low-price coffee beans for the consumer.

In short, coffee prices will continue to fluctuate from year to year, a prime example of the laws of supply and demand. How can you, the consumer, deal with that fact? Fortunately, the Internet provides a virtually limitless source of coffee bean suppliers and the opportunity to comparison shop for low price coffee beans that fit your own particular needs and favorite coffee flavor profile.