Yunnan coffee price replay "roller coaster" to seek pricing discourse is the foundation to break through.

Yunnan coffee prices are rising all the way

Since 2012, affected by the decline of international coffee futures prices, Yunnan coffee prices have been hovering around the coffee production cost line, coffee purchase prices in 13~14 yuan/kg, once appeared cost inversion phenomenon, coffee planting industry for two consecutive years "winter".

On May 12, Hu Lu, deputy secretary-general of Yunnan Province Coffee Industry Association, said in an interview with reporters that on March 4 this year, the price of C-type coffee on the New York Futures Exchange rose 17.40 cents/pound in a single day to 197.78 cents/pound, equivalent to RMB (6.2504, -0.0031, -0.05%) about 26.7 yuan/kg, the biggest single-day increase in 20 years. This completely broke the calm of the coffee bean trading market that lasted for two years. On March 6, the price of coffee C rose to 209 cents per pound on the New York Board of Trade, reaching a recent peak in coffee prices.

On March 15, international coffee futures prices fell with the rain in Brazil. In just one week, the price of C coffee on the New York Futures Exchange fell from 209 cents/lb to 171 cents/lb. The purchase price of Yunnan coffee has also dropped from a high of 26 yuan/kg a week ago to 22 yuan/kg. Qingming season, Brazil's National Coffee Association announced that Brazilian coffee is expected to reduce production by 300,000 tons, coffee futures prices have risen, prices hovering between 195~205 cents/pound, equivalent to about 26~27 yuan/kg, compared with 115 cents/pound in the same period last year, up 80~90 cents/pound.

Coffee prices have always been characterized by cyclical fluctuations. It is understood that Yunnan coffee prices have risen and fallen three or four times in more than 10 years, 25~26 yuan/kg is the average purchase price of Yunnan coffee beans in recent 10 years. "Over the years, most farmers in Yunnan have become more and more mature and rational about price fluctuations, and the bearing capacity of enterprises has become stronger. However, too high or too low a price will have a significant impact on the industry." Yunnan Province Agriculture Department Tropical Cash Crop Division Director Ma Chi said.

Yunnan coffee prices have continued to rise since February this year, according to the April quotation table on the website of Yunnan Coffee Industry Association. For example, coffee prices have risen from 14~15 yuan/kg in January to 24~25 yuan/kg at present. Before the Spring Festival, the purchase price of coffee beans in Yunnan production areas once dropped to about 12 yuan/kg. According to this calculation, the purchase price of coffee beans has increased by nearly 100% so far.

Global main production areas generally reduce production

Yunnan Province coffee industry insiders analysis believes that the world's main coffee producing areas are affected to varying degrees this year, resulting in coffee beans generally reduced production, which is the main reason for this round of coffee bean price rise.

Since November 2013, Brazil, the world's largest coffee-producing area, has suffered a severe drought and is expected to reduce coffee production by about 300,000 tons this year. In addition, many coffee producing areas around the world have experienced varying degrees of coffee bean production reduction.

Hu Lu said that Yunnan coffee has grown from more than 300,000 mu in 2008 to more than 1.4 million mu at present. According to the normal production situation of the production area, the yield of this harvest season should have been more than 100,000 tons. Although Yunnan's coffee harvesting work has basically ended, the coffee production is less than 60,000 tons, which is more than 40,000 tons lower than the expected normal production.

An industry insider said: "Yunnan coffee production decreased due to different degrees of dry weather early in the harvest season." In addition, in the early stage of coffee ripening, coffee prices fell below production cost prices, and some coffee farmers gave up harvesting, resulting in some coffee fruit necrosis on trees. However, from December 15 to 22 last year, frost and cold damage for more than a week caused a large area of Yunnan coffee to be affected. All these factors have led to a significant reduction in Yunnan coffee production."

Hu Lu predicted that Yunnan coffee prices will remain fluctuating around 200 cents/pound from April to May due to factors such as international coffee futures prices and Yunnan coffee production cuts. The possibility of price increase in late May is relatively large, and the specific increase is uncertain.

Seeking pricing power has a long way to go

Yunnan coffee accounts for 99% of China's coffee production. Now, from Pu 'er and Baoshan to Dehong, Lincang and Honghe, the planting area of this highly anticipated cash crop will reach 2.5 million mu by 2020. People who are optimistic about the development of the industry have even claimed that the future of this international product is to replace tobacco, which is increasingly unpopular in the world, and become the "pillar" of Yunnan.

As one of the main coffee producing areas in the world, Yunnan coffee prices have long been subject to futures trading prices on the New York Stock Exchange. Influenced by international coffee futures prices, Yunnan's coffee price slump in recent years is like a roller coaster, which is difficult to predict from growers to buyers. This also exposes the great market risk of Yunnan coffee relying heavily on parity exports.

Yunnan Coffee's ultimate dream is to become Jamaica's Blue Mountain Coffee, which can be highly esteemed with very little yield. However, the reality is that nearly 75% of Yunnan coffee in 2013 was exported as a primary product of raw beans. At present, due to the extremely low added value of Yunnan coffee products, the lack of large-scale comprehensive leading enterprises and brands in the coffee deep processing link, far from playing a leading role in market share and market evaluation at home and abroad, the dependence on internationally renowned coffee enterprises is still strong, Yunnan has no pricing right for coffee, which has become one of the main reasons for the turbulence of Yunnan coffee industry. To add to the industry's distress, these foreign-exchange coffees may eventually be combined and named after South America and Africa, while Yunka brands will fall into oblivion.

Therefore, Yunnan should realize clearly how to resist the influence of international coffee futures price while pursuing coffee planting area, which requires Yunnan coffee to take the road of deep processing and brand marketing, enhance the added value of Yunnan coffee and extend the coffee industry chain. Yunnan coffee still has a long way to go to seek the right to speak on pricing.

At present, protecting the interests of growers has gradually become the mainstream consciousness, which is also an important motivation for Yunnan to increasingly tend to develop the "company + base + cooperative" model.

Although the well-funded coffee enterprises transfer the price risk of ordinary growers, this risk itself will remain within the industry, which is also absolutely unbearable for any coffee enterprise. This is also an important motivation for the cloud coffee industry to hope to set up a coffee futures exchange. In Hu Lu's words, it is "ultimately to resist various risks through financial means." In Hu Lu's view, if there is a futures market, enterprises can put contracts signed with cooperatives into the futures market for hedging, which is actually transferring price risk to the futures market.

Hu Lu believes: "After the establishment of the futures exchange, Kunming can concentrate the coffee of the entire Southeast Asian countries, and the total amount of coffee will reach 2 million tons, accounting for about 25% of the world." After the establishment of futures electronic trading platform, there will be futures and spot trading platform, which will reduce the procurement cost and storage cost for foreign procurement. At that point, Yunnan coffee bean prices will be self-contained and no longer subject to the U.S. futures market. And this spot platform will also accumulate a lot of experience for future futures trading." Hu Lu firmly believes that the "gate of spring" of Yunka is about to be fully opened, and he even proposed the concept of building Kunming into "Asian Coffee Capital". In his view, Yunnan coffee itself, which accounts for 99% of the country's output, can represent China, and because of its geographical and economic advantages, it can become the coffee industry center of South Asia and Southeast Asia. What more firmly supports his idea is that China itself is a trillion-yuan coffee consumption market.