2022. A year without your favorite coffee?

The next two weeks are not crucial.


For starters, we’ll set a couple of rules so this text doesn’t go into too much detail. And in too much theorizing.


So, a few basic facts:

1. Coffee is a commodity. Practically, the price of coffee is the result of market expectations in the future. Of course, the foundation is what is happening now and what will inevitably affect future deliveries. We will not enter into external manipulations here that may also affect the price in the future.

2. When we talk about coffee (in this record), we mean exclusively the Arabica variety. It makes up 75% of the coffee on the market and, from a qualitative aspect, this variety is the most important to us because we also use it when choosing our coffee. The other 25% of the market is Robusta (lower quality, but more resistant to extensive cultivation) and we will ignore it because it is mostly reserved on the stock markets for a long time in advance (futures contracts) - and thus relatively fixed in price - for commercial coffee producers who use it to reduce production prices of their packaging (so-called blend coffee).


So, the most important thing first. We are of the opinion that no one will be left without coffee. But as far as price is concerned, the situation is somewhat different. Most commercial coffee producers will raise prices in the next month in an effort to mitigate the impact of current inflationary factors. Before you crucify them, realize that their current price is a reflection of both past and expected impacts on coffee cost prices. The various non-market constraints (conditioned by the corona pandemic) complemented by lower production of the Arabica variety have jointly produced enormous pressure on the supply side of the market which has already been extremely pressed by ever higher demand than has been the case in the last two years. Thus, in addition to the ubiquitous corona insanity, inflationary factors are as follows:

1. Production in Brazil until September this year was 29% lower than the year before. Bearing in mind that Brazil produces 40% of the total "output" of Arabica in the world, production of less than a third would in itself be enough for ''panic'' buying and the consequent pressure on prices.

2. The decision of producers in Colombia to stop selling (Colombia is the second largest producer of Arabica in the world) hoping that in this year's conditions they will pressure customers to pay a higher price for 1 kg of coffee.

3. An increasingly unavailable transport service resulting in the acceptance of higher transport prices by the wholesaler/manufacturer to ensure timely transport to its customers. We must not forget that coffee is a fruit. Timely transportation is crucial for better quality coffee in your cup.

4. Pressure on other resources that affect the final price of coffee in the cup. Namely, as is already generally known, inflationary pressures are present in the entire supply market. The price of gas, utilities, labor and other costs is extremely volatile and under constant pressure of increased demand or deficit in supply.

5. Price for 100kg of coffee on the NYSE 20.10.2021. - 205.3 $ / Price for 100kg of coffee on the NYSE 20.10.2020. - 106.6 $


The perfect storm. As you have noticed, it is rare for there to be so many simultaneous pressures on the final price of an individual product in the market for goods and services. By analyzing the segments and resources that make your perfect morning cup of coffee possible, literally everyone is under price upward pressure.


From the Bonk perspective, certain price corrections can be expected, but the prices of coffee prepared at our location will remain unchanged until further notice. One important thing is going in our favor. Namely, most "Specialty coffee" shops do not procure coffee in places where commercial producers do so. Our orders are smaller, in most cases purchased directly from producers (or their purchasing centers) and at slightly more expensive prices, which still puts producers in a more favorable economic position. Of course, other inflationary pressures for us remain the same as for everyone else.


And, finally, the question from the title. No. No one will be left without their favorite cup of coffee. World trade, however, is agile enough and very capable of absorbing current market shocks.


Therefore. Drink coffee. Brew it without worrying to much. And share the road when riding.