The price of coffee is falling but doubtful that the Swedish coffee prices will fall


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Sunday, 28 August 2011
There is hope for cheaper coffee in Sweden this fall, since the price situation in the world is falling prices. Yeah? Wrong! Some people strongly hold that this not happen in Sweden.

The Swedes love their coffee and would kill for one and their eyes are on how the price of coffee behaves in the market. Recently, the business press reported that there has been bumper crop in Vietnam and the biggest harvest in three years in countries like Colombia, Mexico and Peru.

On commodity exchanges around the world, coffee prices have fallen sharply from their peak in May at $3:13 per pound, the highest price in 34 years. In the current situation, the price has been pushed down $2.75 per pound, after plunging $2:30 at the beginning of August.

In the U.S., major producers such as Kraft Foods and JM Smucker Co. have already responded with price cuts of 6 percent.

It could be expected that in Sweden, price-setters would also follow suit – doubtful, this is doubtful!

“What we see, in the short term, is that the purchase prices go down slightly. It's no great drama, but there is a tendency in the short term on the purchase side. This may be reflected in the stores eventually,” says Staffan Ekengren, press officer at Ica, one of the biggest dealers in coffee in Sweden.

He points to a number of other factors - such as currencies, speculation on futures markets and the need to cap prices in the shops - which also must fall into place.

At other supermarkets such as Coop Forum, Magnus Nelin, there, is even more doubtful if there is room for price cuts.
“We have not noticed such a thing yet,” he says.

In Zo�gas, one of the largest coffee producers, they see no room for price cuts right now – which is quite the contrary to what the Americans are seeing.
“I believe that the American producers have already regretted, when coffee prices in world markets now are on the rise again,” says Douglas Jonhag, purchasing manager at Zo�gas, part of the Nestl� Group.

The price increase in August is linked to frost damage of coffee in Brazil, the world's largest producer.
Jonhag thinks that the Swedish people in a long time "have been spoiled with cheap coffee," because coffee is served as a loss leader in Swedish stores. Looking ahead, he does not believe this is because demand is growing at a higher rate than the coffee industry managing to deal with.
“Global consumption is exceeding production right now with 8 million bags per year. It is as much as the entire Nordic coffee consumption for two years,” says Jonhag.
By Team

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