The Bennetts Monthly April '20
All things Bennetts & Coffee ...
In a time of rapid change, it’s heartening to see so much of the coffee community adapt to the ‘new norm’ that is social distancing.
Whether you’re in a fortunate position to still be trading , moved to working remotely, or have been forced to temporarily close, we want to remind everyone that supporting each other and supporting local businesses , is the only way to get through this. In our last letter, we talked about being open and transparent from the roaster side up and supplier side down, and this holds true now more than ever.
Fortunately, the consumption of coffee doesn’t stop for a recession or a virus, however trends do change. During this unique time, consumers will opt to drink more at home, and as jobs disappear, and some incomes will be reduced, the consumer will adapt to find more economic ways to enjoy their caffeinated beverage. Unfortunately the fallout from this may be that producers are overlooked in the supply chain as consumers focus their attention on local issues, rather than worrying about where their cup of coffee came from.
With recent market swings globally, and now the threat of global recession, it is very likely that coffee farmers are going to take a hit again. For this reason it is important for us to stay connected with our suppliers in these uncertain times, to ensure we are giving them all the support we can. Working with co-ops, communities and certified coffee growers is just one of the ways we know the money is getting to the right people.
As fast as issues have moved in Australia we are now seeing the same across the worlds coffee producing countries. With many origins shutting their boarders and instigating internal lock downs we foresee some issues arising with shipping delays and future supply regularity. As the world winds down its economic activity we have been advised by some origins they are already experiencing issues of various kinds and it changes on a daily basis. However origin shipments are still being made and vessels are still sailing.
A WORD FROM THE CUPPING ROOM
While shipments have slowed slightly, we still have great tasting coffees coming through the door. In this unique time, you may need to change your blend or try a new origin, and that’s where we can help. We are very happy to post out samples either green or roasted so you can try new coffee types from the comfort of your own lab (or home as it might be these days)! Get in touch with your Account Manager for selections and options.
The final words of our January market report (what now feels like a lifetime ago) sound quite ominous in today’s environment:
How severe the consequences of this outbreak will be to the sector (and the World Economy for that matter), will really depend on how quickly the spread of Coronavirus is contained, and ultimately controlled.
Well, we now know how that all went… Apart from extreme hand-washing and social distancing, Covid-19, and its myriad effects on the economy (and society at large) have been hard to avoid. If you were to describe the coffee market during March 2020 in a nutshell, it would go something like “extreme volatility, underpinned by massive uncertainty in the face of a global pandemic”.
In fact, the effect Covid-19 has had on the coffee market is interesting, as it’s not as clear cut as say emerging economy currencies or the stock market, which just straight up plummeted. Arabica actually sustained some reasonable gains as the market rose steadily from the lows of around 100 USc/lb in early February to highs of over 120 USc/lb. A corrective move took over the first half of March took prices back to the low 100s, as Coffee got caught up in the global selloff which engulfed economies around the world once they realised the severity of what was happening around them.
Following that, Arabica futures staged a sharp rally to just over 130 USc/lb over the course of a week due to some wholesale panic-buying coffee for nearby delivery periods in order to shore up stocks in the event of supply disruptions at origin. This drive seems to have subsided for now at least, and prices have drifted lower to the low 110s.
Apart from the noise we’re seeing, it’s really hard (at least at this point in time) to see anywhere for the coffee market to go but down, or sideways at best. Yes, there will be disruptions in supply at the origin level which might aid in prices spiking here and there. However, a decimated global economy will be a hindrance to an improvement in global coffee prices for the foreseeable.
We recently received correspondence from the Grounds for Health team this week, they are carrying on operations as best as possible with a ‘non-profit version’ of financial stress but are confident and committed to pushing through. According to Executive Director Elle Starr, “What keeps me up at night is the thought of what is ahead for our staff and the people in our coffee communities in Kenya and Ethiopia. I am in regular touch with them as you can imagine, and fortunately, the staff in both countries report that their leadership is taking it all very seriously. The people not working in health care are apparently anxious but still not universally understanding the importance of social distancing. The worst is obviously soon to come. My only hope is that the remoteness of our communities will counter the substantial risks associated with the lack of quality and accessible health care, not to mention clean water”.
We know charities may be the last thing on your mind right now but don't hesitate to get in touch if you want to know more about what Grounds for Health are doing, or get a view from a local perspective at origin. We thank you, our customers again for the continued support, so that we may in turn support these great causes.
The Bennetts Team