[Homeroast] WSJ article on old, stale coffee beans entering the supply chain

John Nordling john.nordling at gmail.com
Wed Jun 15 21:02:09 CDT 2016

That just about explains the coffee that is provided free to me at my

On Wed, Jun 15, 2016 at 2:57 PM Phil Palmintere <phil.palmintere at gmail.com>

> In case you missed it:  http://on.wsj.com/1VYgM0C an interesting article
> in
> today's Wall St. Journal about old Arabica beans entering the
> commercial/industrial market (think: vending machine coffee) because the
> price premium for old Arabica over fresher Robusta has collapsed.
> ***************
> Before you take that next sip of coffee, consider this: Some of the beans
> in
> your cup of joe might have been picked during the Bush administration.
> Arabica coffee that had been stored away as markets cratered in 2013 is now
> pouring out of warehouses, flooding the market with beans as old as nine
> years.
> Those beans, which are considered higher quality than the more bitter
> Robusta type typically found in instant coffee, are coming out now because
> they get cheaper the longer they sit. Prices for better varieties have come
> down enough to tempt buyers who would usually be in the market for lesser
> grades.
> Coffee that sits for 121 days after being certified by the ICE Futures U.S.
> exchange in New York loses half a cent a pound in value. The value of
> three-year-old coffee gets cut by 35 cents a pound. Nine-year-old coffee is
> discounted by $1.55 a pound, which would make it essentially free, as
> Arabica coffee for July delivery on Tuesday closed at $1.35 a pound.
> "There are some very old coffees that have been sitting around for years
> that are going out the door," said Edgar Cordero, senior adviser on global
> strategy for the Colombian Coffee Federation, an industry group.
> https://si.wsj.net/public/resources/images/MI-CQ116_OLDCOF_9U_20160614163306
> .jpg
> <https://si.wsj.net/public/resources/images/MI-CQ116_OLDCOF_9U_20160614163306.jpg>
> According to exchange data, at the end of May, 18% of exchange-certified
> beans were more than three years old, compared with 11% in May 2013.
> Several
> coffee roasters said they wouldn't purchase beans that were more than a
> year
> old because they lose their flavor.
> Coffee buyers said the oldest Arabica beans are headed to bulk and
> instant-coffee roasters, and ultimately to the companies that supply
> largely
> institutional coffees that can be found at some hotels, schools and vending
> machines. Many are expected to combine the older beans with newer ones or
> roast them longer to mask the taste.
> "You're not going to see this in your Starbucks," said Jorge Cuevas, chief
> coffee officer at coffee importer Sustainable Harvest, based in Portland,
> Ore. "It's mostly going to be in generic brands that you might get at an
> institutional level."
> As Arabica coffee's value deteriorates in storage, it becomes more
> attractive to certain commercial buyers that typically favor the
> lower-quality and cheaper Robusta bean, said Judith Ganes Chase, president
> of commodities research firm J. Ganes Consulting LLC of New York.
> In addition, droughts in the Robusta-growing regions of Brazil and
> production delays in places such as Indonesia have pushed the price of
> Robusta up 5.8% this year, which recently narrowed the gap between the two
> varieties to less than 50 cents a pound. The gap had widened to more than
> 61
> cents as of Tuesday.
> Robusta for July delivery closed at $1,618 a ton on ICE Futures Europe on
> Tuesday.
> Some of the beans are so old that most lenders won't allow buyers to use
> them as collateral, according to a person familiar with industry-lending
> practices. Beans over two years old are typically assigned little or no
> value, the person said.
> The now-declining glut of stored coffee got its start in 2011. Futures for
> Arabica coffee hit their highest price in more than three decades that year
> at $3 a pound, boosted by limited supply and a new appetite in tea-drinking
> emerging markets such as China. Overproduction followed, and the beans
> arrived just in time for emerging-market growth to slow. By 2013, Arabica
> futures prices had fallen to $1 a pound.
> Producers stored their coffee rather than sell it cheaply. The average age
> of beans sitting in coffee exchange-certified warehouses peaked at 853 days
> in February 2015, up 80% from two years earlier, according to data from the
> ICE Futures U.S. exchange. Producers are now beginning to unload that
> coffee, reducing the average age to 648 days, ICE data show. That is still
> an old bean, but the shrinking average age is a sign that the oldest are
> leaving storage for the marketplace.
> Inventory depletion is helping to bolster pricing, with Arabica up 6.6%
> this
> year after touching a one-year high last week. Brazil, the largest coffee
> producer in the world, is expected to have a record Arabica crop in the
> 2016-2017 marketing year but will need to use a larger amount of that crop
> to supply its own population, according to the International Coffee
> Organization, an intergovernmental body. The country exported so much
> coffee
> earlier this year when prices were favorable that the country's
> coffee-exporting organization said Brazil needed to dip into old stocks to
> meet the nation's demands.
> The difference between a one-year-old cup of java and two-year-old coffee
> for discerning drinkers can be striking. Allie Caran, an educator at coffee
> roaster Toby's Estate in Brooklyn, roasted two Brazilian coffees at a
> recent
> tasting, one two years old and one from Brazil's most recent harvest.
> Both were roasted that day, she said, but it was impossible to taste the
> "graham cracker, sweet toffee and toasted hazelnuts" detected at the farm
> where the now two-year-old coffee was grown. The coffee tasted like the
> jute
> bag it was shipped in, she said.
> "It reminds me of cedar. Or a toothpick," Ms. Caran said. "This isn't a
> coffee we'd sell."
> It is a coffee you can survive, however.
> "Even if the beans get moldy, you're roasting them above 200 degrees
> Celsius
> (392 degrees Fahrenheit), way above boiling water," said Bill Ristenpart, a
> professor in chemical engineering and materials science and researcher with
> the University of California, Davis, Coffee Initiative, a research and
> educational program. "It kills everything."
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Email:  john.nordling at gmail.com

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