The price of your green coffee depended not only on quality, but also on oil, geopolitics and a monetary agreement signed in the Saudi desert half a century ago.
Since World War II, coffee has been transacted predominantly in US dollars, a direct consequence of the stability and global acceptance that the currency acquired following the Bretton Woods Agreements. But it was in 1971, when the United States abandoned the gold standard, that the system took a more aggressive and lasting form. Global trade needed a new anchor. Oil provided it. The 1974 petrodollar agreement ensured that every barrel of crude oil was priced in US dollars — and with it, virtually every commodity on the planet, including coffee. The most traded agricultural product in the world was trapped in an orbit that it never chose and from which it has never been able to escape.
The consequences for coffee farmers have been profound and invisible. Since Arabica futures are traded in New York in dollars, a small farmer in Ethiopia or Colombia does not sell his crop at a price that reflects his labour, his land, or the quality of his harvest — but at a price determined by currency fluctuations in a financial market to which he has no access. When the dollar strengthens, his income decreases. When oil prices rise, so do fertiliser and transportation costs, both denominated in that same dollar. The petrodollar not only determines the price of crude oil, but it also determines the conditions under which the coffee reaches your roastery.
As roasters, you are at the other end of this chain. The green coffee prices you negotiate, the hedging strategies your importers use, the shipping costs of each container from Mombasa or Addis Ababa— everything moves with the dollar. Therefore, a decision on interest rates by the Federal Reserve in Washington can reduce your margins in Barcelona or Santiago without moving a single kilogram of coffee. The US dollar is the silent variable in every coffee cost calculation, and understanding it is not an academic exercise: it is a competitive advantage.
This structure, however, may be changing. In addition to the global disillusionment with US policies over the last 50 years, China's push for yuan-denominated oil trading is gaining traction, even though the dollar still dominates approximately 80% of global crude oil trade. As China establishes itself as one of the fastest-growing coffee consumer markets, the pricing dynamics of the entire industry might gradually adjust. For European roasters, a multipolar monetary world warrants special attention; it could lead to more stable supply conditions for producing countries or introduce new layers of volatility that are difficult to predict. In any case, the era in which a single currency quietly controlled your cup may be coming to an end.
Stay informed and caffeinated!
As roasters, you are at the other end of this chain. The green coffee prices you negotiate, the hedging strategies your importers use, the shipping costs of each container from Mombasa or Addis Ababa— everything moves with the dollar. Therefore, a decision on interest rates by the Federal Reserve in Washington can reduce your margins in Barcelona or Santiago without moving a single kilogram of coffee. The US dollar is the silent variable in every coffee cost calculation, and understanding it is not an academic exercise: it is a competitive advantage.
This structure, however, may be changing. In addition to the global disillusionment with US policies over the last 50 years, China's push for yuan-denominated oil trading is gaining traction, even though the dollar still dominates approximately 80% of global crude oil trade. As China establishes itself as one of the fastest-growing coffee consumer markets, the pricing dynamics of the entire industry might gradually adjust. For European roasters, a multipolar monetary world warrants special attention; it could lead to more stable supply conditions for producing countries or introduce new layers of volatility that are difficult to predict. In any case, the era in which a single currency quietly controlled your cup may be coming to an end.
Stay informed and caffeinated!
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