Coffee, from David Lillienfeld

July 23, 2015 |

As some might recall, I follow coffee pretty closely. And while coffee trading may be a relatively closed shop, the price still responds to supply and demand. I recall from my econ class that even monopolies have to factor in the reduction in demand consequent to an increase in price unless the good is inelastic. That's four decades old, though, so maybe my recollection is off.

Here's the thing: oil's dropping as the supplies bulge and the dollar strengthens. Gold's weak as well. That fits a deflationary environment. Increasing interest rates fits an inflationary one. Coffee remains weak, trolling multi-year lows. What's intriguing to me about this is that evidence continues to grow that the el Nino taking place is getting stronger, and there's now discussion of whether this year's even might be stronger that the record one in 97-98. El Ninos generally mean the coffee crop is smaller than average. So while weather developments suggest a reduction in supply, pricing suggests a marked decline in demand, too. Either that or deflation with a stronger dollar.

Maybe I'm missing something here. (I probably am.) Anyone care to help me understand this better?

anonymous writes:

Procter & Gamble, Starbucks, Sara Lee, Kraft, Tchibo and Nestlè control 60% of the market. Actually they are in overproduction, 120 million bags (sixty pounds) of coffee products, 105 consumed. The inventories accumulates from year to year.

They are trying to introduce into the market a GMO coffee variety whose seeds ripen all at the same time, greatly cutting production costs and collection costs, allowing automatation. They are destroying the lives of 125 million people, mostly small-scale farmers and their families for profit in exchange for a coffee built in the laboratory.

Andrew Goodwin writes:

Has anyone else made the same observation that nearly without fail, the same people who make the sternest warnings about climate change are the same ones who mostly firmly protest GMO food?

If the climate is changing then please explain why the crops that worked in the old climate will succeed in the new one. Sometimes it is enough to make me think these folks are going to succeed in starving us all.

In this case, respectfully, it seems that some parties would rather see higher coffee prices, which they think will help some number of people. They don't consider that the destruction of the Brazilian rainforest to make room for coffee plantations, profitable only with prices at higher levels, might have catastrophic impact on humanity in the longer term.

Michael Ott writes:

I've noticed that those that are vocal about climate change tend to make arguments based on the overwhelming scientific evidence. Yet when pressed with overwhelming evidence about the safety and benefits of GMOs they ignore it or claim it's a conspiracy. They make fun of those who ignore climate change science or claim it's a conspiracy. It's all hypocritical. This article was thought provoking: "Unhealthy Fixation: the war against genetically modified organisms is full of fearmongering, errors, and fraud. Labeling them will not make you safer."

Jim Sogi writes:

The Kona Coffee specialty crop will be big this year. There are a lot of beans and just starting to ripen. We had some big rains right at the beginning of the season and there were rows of fragrant coffee flowers early on. The coffee borer was bad last year, but as with many natural cycles, it is not as bad this year. With the trees stronger from good rain, the pests can't get as big a foot hold. There is not enough Kona Coffee to make even a drop in the world wide market, but it's what I grow, harvest, process, dry, roast, grind and drink. There's not many coffee gourmets who can say that.

My son got me a nice Rancilio grinder. It's made a huge difference and now I enjoy real Italian style espresso and cappucinos. It's a game changer compared to the cheapo grinders and results in a very even fine fine grind which you can't get any other way.

Stef Estebiza writes:

There is a ton of material about the problems with GMOs, and not only with the way in which they are then treated with pesticides. The list is long, but lobbyists' interests are mor profitable and important than your health. Here are two articles:

"Cancer Viruses Are Deliberately Inserted Into Your Food"

GMO: Study Shock, Toxic to Animals and Man

Michael Ott replies:

Stef,

Those articles are perfect examples of unfounded claims. This quote is just false: "because they are heavily contaminated with the toxic herbicide, Roundup". Literally dozens to hundreds of tests have been performed and prove the opposite.

False: "petunia plant which is a nightshade. That means folks with nightshade-induced arthritis can now get arthritis from soybean products." This has never been shown in a valid scientific study. Rather it's been repeated by pseudoscientists from a base false claim.

The second article showed results based on massive unrealistic doses and has been widely discredited.

Comments

3 Comments so far

TC on July 24, 2015 8:16 am
Lots of pro/con articles/studies about GMO, mostly from vested interests. But the more thoughtful comments I’ve seen tend to cluster about the issue of the very rapid introduction and change to the human food chain in years, for what used to take generations and our bodies’ ability to adapt to new ‘foods’/chemicals that we’ve never seen/experienced before, without causing some sort of physical/metabolic rejection. Perhaps the spike in GI diseases, in the last 10-15 years, speaks to the issue.
jj on July 24, 2015 4:12 pm
michael,

the biggest problem with many of these gmo studies is that they dont cover a long enough period — what we need to see are the effects of gmos over an animal’s whole natural life-time. the lead study in the slate article, while it collects over a long period of data, over 92% of the animals studied were broiler chickens that were fed and slaughtered after 42-49 days. there are some dairy cows and laying hens in there, and dairy cows get to live up to 5yrs, but with 92+% living less than 120 days, there’s enough junk data to throw off any statistical significance that mightve been there.

this is the closest we’ve got to a ‘life-time’ study: http://www.dailymail.co.uk/sciencetech/article-2205509/Cancer-row-GM-foods-French-study-claims-did-THIS-rats–cause-organ-damage-early-death-humans.html

i agree that there arent enough controls in that study. but then theres this: http://www.scientificamerican.com/article/do-seed-companies-control-gm-crop-research/

here’s an excerpt:
Unfortunately, it is impossible to verify that genetically modified crops perform as advertised. That is because agritech companies have given themselves veto power over the work of independent researchers.
To purchase genetically modified seeds, a customer must sign an agreement that limits what can be done with them. (If you have installed software recently, you will recognize the concept of the end-user agreement.) Agreements are considered necessary to protect a company’s intellectual property, and they justifiably preclude the replication of the genetic enhancements that make the seeds unique. But agritech companies such as Monsanto, Pioneer and Syngenta go further. For a decade their user agreements have explicitly forbidden the use of the seeds for any independent research. Under the threat of litigation, scientists cannot test a seed to explore the different conditions under which it thrives or fails. They cannot compare seeds from one company against those from another company. And perhaps most important, they cannot examine whether the genetically modified crops lead to unintended environmental side effects.
Research on genetically modified seeds is still published, of course. But only studies that the seed companies have approved ever see the light of a peer-reviewed journal. In a number of cases, experiments that had the implicit go-ahead from the seed company were later blocked from publication because the results were not flattering.

so, on the one hand, they attack these independent studies having a design flaw, and on the other hand they make you sign a contract when you buy seeds from them, restricting their use in independent studies unless they are ok with the results, OR, the study is flawed in some way, and thus easily refuted and not taken seriously by the scientific community.

maybe the best people to ask about this are the farmers: http://naturalsociety.com/farmers-noticing-better-animal-health-non-gmo-feed-scared-say/
jeff watson on July 24, 2015 5:11 pm
The Chair introduced me to K-cups 6 or 7 years ago. I loved their economy and ease of use without any waste. The fact that K-cups exist is a major bearish element in the coffee market. Whether you can make money off trading it, all I can say is caveat emptor. http://tinyurl.com/odm6gmq

Recent Posts

List of Authors

Jul

23