Coffee Special for February/March
January 21, 2011
We're offering our own Gallins Gourmet Coffee Kona Blend as the special for February & March! Now through March 31, add our Kona Blend to your Office Coffee Service order for only $27.95 per case; that's only $0.78 per pack! Take advantage of this limited-time lowered rate to try our newest blend, treat the office to an exotic Hawaiian coffee, or stockpile extra coffee before the price goes back up. Call your Office Coffee Service Representative today, or make a note to add this delicious, flavorful coffee to your next order so that you don't miss out on a great deal!
2010 Coffee Year In Review
January 18, 2011
Coffee turned into a volatile market in the second half of 2010. Read the breakdown of why in the words of our coffee supplier:
"2010 was a year that should have been split in half. The first 6 months saw green coffee futures prices trade in a narrow range from 126.50 to 140.50. Then all hell broke loose in mid-June. The market took off on 6/11 from 137.00 and went all the way to 242.25 on 12/22. That’s a 77% increase in 6 months!
Why did it happen? And why did it start in mid-June when the hot summer usually causes prices to go down most years?
Well it actually started in April, when it broke through 140.00 but then the Euro collapsed as the financial problems of Greece and several other European countries came to a crisis point. The stronger US$ caused several hedge funds to sell their commodity holdings and buy back their short US$ bets. By the time that crisis subsided, a couple of months went by, and the hedge funds came back to buying coffee and other commodities (we’ve all heard about gold/silver/cotton/copper etc making new highs).
But it wasn’t just the hedge funds buying coffee futures. There were several severe problems brewing in coffee, but they were ignored or discounted because Brazil was harvesting the biggest crop in their history – perhaps 55 million bags. Surely the market couldn’t rally in the face of that much supply, right?
Well, let’s see why it did just that…
- Consecutive poor harvests in Colombia (the largest supplier of washed Arabica) have reduced the availability of high quality washed Arabica, driving premiums up all across that spectrum.
- Worldwide consumption has risen to 131 million bags in the last decade but only Brazil has increased production.
- Because of the on-year/off-year cycle in Brazil, you have to look at a two year cycle of statistics there. Brazil needs 98 million bags each two year cycle, due to export demand (30 million) and internal consumption (19 million) each year. Last year’s 43 million + this year’s 55 million = 98 million. No help there.
- Stocks in the producing countries have been at their lowest level for the last 3 years since the USDA started keeping the stat over 45 years ago.
- Green stocks in all hands in the U.S. are at their lowest level in 10 years (< 4.5 million bags)
- Now we learned that Brazil exported a record 33 million bags in 2010 meaning they will have even less carry-over to help out with next year’s lower crop
What can we look forward to that might help this market slow down, or even better, turn around?
- Today, the Commodity Futures Trading Commission (CFTC) is holding public hearings about their proposed rule changes that might help limit the size of the positions that hedge funds and other speculators can hold. It could be months before anything is implemented though and it is not clear that they will truly help.
- A prolonged strengthening of the US$ would help as those funds that believe a weak dollar is best offset by investing in commodities would have to reassess their holdings.
- A “normal” harvest in Colombia of 12 million bags next year (2011/12) but we won’t know if that is possible until late summer. Early signs are not encouraging though as heavy rains fall in much of the growing areas, knocking off flowerings and disrupting late season harvesting.
If the largest crop in Brazil’s history couldn’t prevent this rally, the answer will have to lie elsewhere."
More Increases in Coffee Product Pricing
January 14, 2011
The continued increase in coffee prices has spurred increases in more coffee and allied products. While we cannot control the increases placed upon us by suppliers, we can notify you of the price increases so that you are prepared for them, allowing you to alter your purchasing strategy to accomodate or avoid these increases. We recently found out that the following items will be increasing soon if they have not already increased:
Coffee-Mate 50-ct Flavored Liquid Creamers - Up 4%
Coffee-Mate 180-ct Original Liquid Creamers - Up 6%
Starbucks Fractional Pack Coffees - Up 8%
Nestle Rich Chocolate Hot Chocolate - Up 5%
Keep checking the news feed or sign up for our newsletter to stay up-to-date on all of the latest information. To learn about product options that can save money without sacrificing quality during this time of increasing rates, contact your coffee service representative, or visit the Contact Us page of our website and we will be glad to assist you in planning the ideal coffee program for your company based on your preferences and budget.