The price of coffee beans is down for more than 10 years! Brazil's production increases, Lille devalues and considers selling rights

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While coffee drinks have become increasingly popular around the world, prices for coffee beans have softened since October last (2018) and have now fallen 25 per cent to a low of more than a decade.

The Wall Street Journal reported on the 22nd that according to the Intercontinental Exchange quotation, the wholesale price of Arabica coffee beans in New York has been less than US $1 per pound since the beginning of March, falling below the producer's planting and processing costs. By contrast, a latte generally still costs $5. The surge in coffee production, coupled with the devaluation of the currency of Brazil, the largest producer, ──, is the main cause of the coffee glut.

The Brazilian government has directly sponsored R & D activities in the coffee industry (such as diverting mechanical harvesting to farmland, which is more efficient than other growers who still use hand-picking), taking away the market share of Central American producing countries.

Brazil's Lille has plummeted, giving locally produced coffee beans a price competitive advantage. Castrol XQ Global winner system quotes show that the dollar was trading at 3.9338 at the end of the 22nd, up nearly 140 per cent from 1.6475 at the beginning of January 2011. Over the past year, the dollar has risen 15.38 per cent against the Lille.

The Brazilian government is rumoured to be considering offering selling rights to producers in an effort to boost coffee bean prices, which have fallen to a 13-year low, and to protect farmers' incomes.

Reuters reported on April 5, citing unnamed sources, that if the policy is implemented smoothly, producers will be able to sell coffee beans to the government at a fixed price, thereby stabilizing the offer. This could push up the price of Brazilian coffee beans and encourage other coffee producers to follow suit.

A director of the Brazilian coffee cooperative said that the government thought their proposal was quite good, which would create a win-win situation. Farmers would be able to sell their crops at a good price, while the government could profit from higher quotations.

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