Coffee is going to be more expensive...
Coffee prices is going up because of bad harvest
The next time you buy a coffee from your coffee shop or cafe, do not be surprised if you are not getting any change.
The increase of more than 50% in coffee pricing has been absorbed by the coffee retailers for almost a year, and not with the prices bent on rising, they have no choice but to adjust their selling price.
Prices of coffee beans per pound rise from $1.99 in 2008 to $2.57 in September 2010! And all along, retailers have been absorbing the cost, by adjusting their variables such as man hours, salaries etc.
But, with commodities traders and even fund managers all directing their funds into commodities especially coffee, the price of coffee can only go up.
The trading market is focused on commodities especially coffee because of the weak dollars and the gloomy economy, which left them not much choices when it comes to good stock or funds to invest in.
And other than oil, coffee is the safest bet -everyone drinks them!
With the current storm that is happening in Indonesia and the flood that has just passed Vietnam, I believed harvest in this area especially for Robusta is going to be affected.
With lower harvest, prices is going to go up.
And the reason for this increase in pricing was initially due to bad harvest from Colombia which suffers from two bad harvest.
So, this cycle might start again with Vietnam and Indonesia having bad harvest.
To hedge against the cost of cappuccino being more expensive, it might not be such a bad idea to buy some coffee beans off the commodities market and possibly make some money.