Grandparent scam: London, Ont., senior beats fraudsters not once, but twice
It was a typical Tuesday for Mabel Beharrell, 84, until she got the call that would turn her world upside down. Her teenaged grandson was in trouble and needed her help.
As if a cup of coffee wasn't expensive enough, a confluence of factors is driving up farmers' costs to grow the beans and it could begin filtering down to your local cafe before the end of the year.
After hovering for years near US$1 per pound, coffee futures -- the price large-volume buyers agree to pay for coffee upon delivery months down the road -- doubled in late July, reaching heights not seen since 2014. Though prices have eased a bit, they remain elevated at about $1.90 per pound.
Coffee lovers already paying $8 or more for a bag in the supermarket or up to $5 for a cup may despair over even-higher prices, but a spike in coffee prices on the international futures market doesn't always trickle down to the consumer.
Here's a look at some factors that could determine whether Americans will be paying more for their morning jolt in the near future.
A sustained drought followed by two July frosts blew a hole in Brazil's coffee output, immediately sending wholesale prices for the popular Arabica bean to more than $2 per pound. The frost will significantly affect the 2022-23 harvest, said Carlos Mera, who analyzes the coffee markets at Rabobank.
The Brazil frosts followed COVID-related supply chain snarls, a dearth of shipping containers, labor shortages and other production hiccups. Add in rising costs for virtually everything and you have a bitter cup brewing for coffee drinkers.
"This is unprecedented," said Alexis Rubinstein, the managing editor of Coffee & Cocoa for commodities brokerage StoneX Group. "It's never been this perfect storm before. It's usually just been a supply-and-demand scenario.
"We've never been dealing with a supply and demand issue on top of a logistics issue, on top of labor issues, on top of a global pandemic."
While it's difficult to determine the size of the crop loss in Brazil, Mera said estimates vary between 2 million and 6 million fewer bags of coffee. That's about 12% of the output from the world's largest producer of Arabica, the bean used for most coffee sold around the world. Lower supplies almost always mean higher prices.
Grace Wood, an industry analyst for market research firm IBISWorld, said if consumers don't see coffee prices rise by the end of this year, they almost certainly will in 2022, as per capita demand is expected to increase.
"That is just going to contribute to more demand that is going to further disrupt operations and make it more difficult for operators who are already experiencing supply issues," Wood said.
Mera said people who buy coffee beans in the grocery store will likely see a more noticeable increase in prices because about half the cost of that bag on the shelf comes solely from the bean itself. However, in large coffee shops, he added, the cost of the bean only represents about 5% of your cup of hot coffee, so roasters "may not need to carry over the increases right away."
It seems likely, although higher coffee prices on the international future market is not a guarantee that prices at your favorite roaster will go up. The damaged crop in Brazil is still more than a year from harvest, plenty of time for many factors to reverse course.
Rubinstein said higher prices on the international market can often stimulate production -- farmers will have more money to invest in their crop -- and if there's more coffee on the market, prices will retreat. But that will also depend on whether the big roasters have enough beans hoarded to get them through however long prices remain elevated.
Starbucks, the world's biggest coffee retailer, suggested that it won't need to raise its prices because of Brazil's lower output. On a call with investors at the height of the Arabica price spike, the Seattle-based coffee chain's President and CEO Kevin Johnson said his company has 14 months of supply, which he says will get it through 2021 and most of fiscal 2022.
Even smaller, independent specialty roasters sign contracts to buy their beans well in advance, enough so that when shortages like the ones in Brazil happen, it doesn't paralyze them. They also source from countries all around the world, so gaps from one place can often be filled by another.
Chris Vigilante, co-owner of Vigilante Coffee with stores in the Maryland suburbs of Washington, D.C., said most specialty roasters don't buy beans on the same international commodities market with the big players like Nestle and Keurig Dr. Pepper. "So we're not as impacted by (Brazil), but we will feel the pressure of it," Vigilante said.
Vigilante said he pays between $3.50 and $5.50 per pound for most of his beans, which are higher quality and produced by smaller farms. He has no plans to raise prices, but if other small shops raise theirs, he said it's likely because the cost for other essentials have risen.
"I've seen other specialty coffee roasters talking about raising their prices, but I think that's more not because of the cost of coffee, but maybe because the cost of some of our other supplies, like cups and equipment," Vigilante said.
-----
Marcelo Silva de Sousa contributed to this report from Brazil.
It was a typical Tuesday for Mabel Beharrell, 84, until she got the call that would turn her world upside down. Her teenaged grandson was in trouble and needed her help.
The deaths of four people on a farm near the Saskatchewan village of Neudorf have been confirmed a murder-suicide.
The Canada Revenue Agency announced Thursday it will not require 'bare trust' reporting from Canadians that it introduced for the 2024 tax season, just four days before the April 2 deadline.
The Parole Board of Canada has granted full parole to one of three men convicted in the brutal murders of three McDonald's restaurant workers in Cape Breton more than 30 years ago.
Nearly 20 hours after a man climbed and remained perched on top of the Reconciliation Bridge in downtown Calgary, the situation came to a peaceful resolution.
Ontario released its annual sunshine list Thursday afternoon, noting that the largest year-over-year increases were in hospitals, municipalities, and post-secondary sectors.
Genetic analysis has shed light on a long-standing mystery surrounding the fates of U.S. President George Washington's younger brother Samuel and his kin.
A spokesman for a regional Muslim advocacy group says Conservative Leader Pierre Poilievre's stance on the Israel-Hamas war could complicate his party's relationship with Muslim Canadians.
Former U.S. President Donald Trump is officially selling a copy of the Bible themed to Lee Greenwood’s famous song, 'God Bless the USA.' But the concept of a Bible covered in the American flag has raised concern among religious circles.
B.C. conservation officers recently seized a nine-foot-long Burmese python from a home in Chilliwack.
A New Brunswicker will go to bed Thursday night much richer than he was Wednesday after collecting on a winning lottery ticket he let sit on his bedroom dresser for nearly a year.
The Ontario government is introducing changes to auto-insurance, but some experts say the move is ill-advised.
A Toronto restaurant introduced a surprising new rule that reduced the cost of a meal and raised the salaries of staff.
Newfoundland’s unique version of the Pine Marten has grown out of its threatened designation.
A Toronto man is out $12,000 after falling victim to a deepfake cryptocurrency scam that appeared to involve Prime Minister Justin Trudeau.
It started small with a little pop tab collection to simply raise some money for charity and help someone — but it didn’t take long for word to get out that 10-year-old Jace Weber from Mildmay, Ont. was quickly building up a large supply of aluminum pop tabs.
There’s a group of people in Saskatoon that proudly call themselves dumpster divers, and they’re turning the city’s trash into treasure.
Ontario is facing a larger than anticipated deficit but the Doug Ford government still plans to balance its books before the next provincial election.