Dear Ha,

there are so many macro factors that can impact the price of commodities, especially the food related one.

Climate change:

With warming climate, more areas of the world are becoming available to grow coffee, increasing competition and decreasing in price.

But then again, climate change brings about more extreme weather, so more freak storms that destroy crops, more disease too. So less production overall in the world, even if some countries like Brazil are managing to increase it (check the USDA research: https://apps.fas.usda.gov/psdonline/circulars/coffee.pdf )

Local conflicts:

civil war, local armed action, rebel fighting within the production area reduces the yield rate of the coffee farms as less people want to move there to work on the fields, and it becomes harder to move the product to market.

Speculation:

Coffee is a commodity traded in stock exchange around the world, which can lead to increase or decrease in price artificially. Remember the sudden increase in chocolate price in 2010? ( https://www.bbc.com/news/business-10682433). It was due to a single trader!

The market organisation:

The simple fact is that the supply chain is really long regarding coffee!

Most coffee growers are not organised in a cooperative manner, but as separate businesses which tend to be small.

They sell to local buyers, who collects from different farmers. They, in turn, sell to regional wholesalers, who then sell to exporters.

Then the coffee is sold to the companies that roast it, creating their blend and sell it to the retailers who then sell it to the final customers.

https://www.edrawmax.com/templates/1015753/

This means that no matter what the coffee price at the end, the growers will only receive a tiny proportion of that money. Moreover, they will barely perceive the increases in price.

Consumer habits:

The more a product is in demand, the more the price will increase, this is a basic economic paradigm.

Coffee consumption is rising steadily, but not massively, only a 20% increase in 10 years!

The amount now consumed is about 11 billion kg a year,

In comparison, in 2022, global consumption of tea amounted to about 6.7 billion kilograms and is estimated to reach to 7.4 billion kilograms by 2025. This is a 10% increase in 3 years.

It looks like tea is set to overtake coffee, so if the demand for coffee stagnate or decrease, then the price will follow the same path.

📷

Government support:

The price could be affected by the amount of government support or not to the industry. If transportation infrastructure around the coffee farms is good, then transport is less costly, reducing the sales price.