Whether Factors Affecting the Price of US Coffee C Futures Are Influenced by the COVID-19 Social Environment

Research Article
Open access

Whether Factors Affecting the Price of US Coffee C Futures Are Influenced by the COVID-19 Social Environment

Ruixuan He 1* , Yuke Liu 2
  • 1 University of Hong Kong    
  • 2 University of Waterloo    
  • *corresponding author Medeahe@163.com
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/21/20230264
AEMPS Vol.21
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-85-0
ISBN (Online): 978-1-915371-86-7

Abstract

During COVID-19, the social environment influenced factors, including monetary policy, precipitation, temperature, exports, imports, tariffs, inflation, and household incomes, resulting in the fluctuation of coffee pricing. This paper selects US Coffee C futures as the benchmark of global coffee pricing, with the US as the representative of the exporting country and Brazil as the representative of the importing country. Based on the data collected from Brazil and US from 2015 to 2022, the research found the following: (1) Before the COVID-19 pandemic, the relationship between the US & EU tariffs and coffee pricing showed a positive trend due to the increase of substitutions' price. Monetary policy, delegated by the exchange rate of BRL against USD, indicates a negative direction toward coffee pricing. This is because it changes the value of coffee beans. Also, the import of coffee beans from Brazil to the US is slightly positively related to coffee pricing since the demand for coffee beans in the US exceeds Brazil's supply. (2) Combined with what is mentioned in (1), the following three factors most affect the COVID-19 social environment. The EU tariffs are becoming insignificant due to general and preferential rates converging. Because the monetary policy has lost much of its ability to influence local markets, it becomes unimportant to global coffee pricing. Meanwhile, international import from the US and export from Brazil becomes relevant to coffee pricing because of the transportation and Brazilian production problems.

Keywords:

COVID-19, influence, coffee pricing, United States, Brazil

He,R.;Liu,Y. (2023). Whether Factors Affecting the Price of US Coffee C Futures Are Influenced by the COVID-19 Social Environment. Advances in Economics, Management and Political Sciences,21,280-289.
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References

[1]. 1.Ramirez, Octavio A. “The Asymmetric Cycling of U.S. Soybeans and Brazilian Coffee Prices: An Opportunity for Improved Forecasting and Understanding of Price Behavior.” Journal of Agricultural and Applied Economics, vol. 41, no. 1, Apr. 2009, pp. 253–270.

[2]. Rhiney, Kevon, et al. “Epidemics and the Future of Coffee Production.” Proceedings of the National Academy of Sciences, vol. 118, no. 27, 28 June 2021, p. e2023212118.

[3]. Silveira, Rodrigo Lanna F. da, et al. “The Reaction of Coffee Futures Price Volatility to Crop Reports.” Emerging Markets Finance and Trade, vol. 53, no. 10, 5 Aug. 2016, pp. 2361–2376, https://doi.org/10.1080/1540496x.2016.1205976. Accessed 25 Feb. 2023.

[4]. Mueller, Bernardo.”The political economy of the Brazilian model of agricultural development: Institutions versus sectoral policy.” The Quarterly Review of Economics and Finance, vol 62, Nov. 2016, pp.12-20,https://doi.org/10.1016/j.qref.2016.07.012

[5]. Oliveira, Gislaine, et al. “Influence of Temperature and Water Activity on Ochratoxin a Production by Aspergillus Strain in Coffee South of Minas Gerais/Brazil.” LWT, vol. 102, Mar. 2019, pp. 1–7, https://doi.org/10.1016/j.lwt.2018.12.032. Accessed 25 Feb. 2023.

[6]. Jarvis, Lovell S. “The Rise and Decline of Rent-Seeking Activity in the Brazilian Coffee Sector: Lessons from the Imposition and Removal of Coffee Export Quotas.” World Development, vol. 33, no. 11, Nov. 2005, pp. 1881–1903, https://doi.org/10.1016/j.worlddev.2005.06.003. Accessed 5 Dec. 2019.

[7]. “Obstacles to Consumption: Tariff and Non- Tariff Measures and Their Impact on the Coffee Sector Interim Report Background 1. Wi.” Webcache.googleusercontent.com, 2020, webcache.googleusercontent.com/search?q=cache:iUmajloZd5YJ:www.ico.org/documents/. Accessed 25 Feb. 2023.

[8]. Capps, Oral, et al. “A Cross‐Sectional Analysis of the Demand for Coffee in the United States.” Agribusiness, 18 Nov. 2022, https://doi.org/10.1002/agr.21779. Accessed 25 Feb. 2023.

[9]. Wei, Xiaoyun. “The impact of COVID-19 pandemic on transmission of monetary policy to Finance markets. “ International Review of Financial Analysis , vol.74, Mar. 2021.

Cite this article

He,R.;Liu,Y. (2023). Whether Factors Affecting the Price of US Coffee C Futures Are Influenced by the COVID-19 Social Environment. Advances in Economics, Management and Political Sciences,21,280-289.

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About volume

Volume title: Proceedings of the 2023 International Conference on Management Research and Economic Development

ISBN：978-1-915371-85-0(Print) / 978-1-915371-86-7(Online)
Editor：Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://2023.icmred.org/
Conference date: 28 April 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.21
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. 1.Ramirez, Octavio A. “The Asymmetric Cycling of U.S. Soybeans and Brazilian Coffee Prices: An Opportunity for Improved Forecasting and Understanding of Price Behavior.” Journal of Agricultural and Applied Economics, vol. 41, no. 1, Apr. 2009, pp. 253–270.

[2]. Rhiney, Kevon, et al. “Epidemics and the Future of Coffee Production.” Proceedings of the National Academy of Sciences, vol. 118, no. 27, 28 June 2021, p. e2023212118.

[3]. Silveira, Rodrigo Lanna F. da, et al. “The Reaction of Coffee Futures Price Volatility to Crop Reports.” Emerging Markets Finance and Trade, vol. 53, no. 10, 5 Aug. 2016, pp. 2361–2376, https://doi.org/10.1080/1540496x.2016.1205976. Accessed 25 Feb. 2023.

[4]. Mueller, Bernardo.”The political economy of the Brazilian model of agricultural development: Institutions versus sectoral policy.” The Quarterly Review of Economics and Finance, vol 62, Nov. 2016, pp.12-20,https://doi.org/10.1016/j.qref.2016.07.012

[5]. Oliveira, Gislaine, et al. “Influence of Temperature and Water Activity on Ochratoxin a Production by Aspergillus Strain in Coffee South of Minas Gerais/Brazil.” LWT, vol. 102, Mar. 2019, pp. 1–7, https://doi.org/10.1016/j.lwt.2018.12.032. Accessed 25 Feb. 2023.

[6]. Jarvis, Lovell S. “The Rise and Decline of Rent-Seeking Activity in the Brazilian Coffee Sector: Lessons from the Imposition and Removal of Coffee Export Quotas.” World Development, vol. 33, no. 11, Nov. 2005, pp. 1881–1903, https://doi.org/10.1016/j.worlddev.2005.06.003. Accessed 5 Dec. 2019.

[7]. “Obstacles to Consumption: Tariff and Non- Tariff Measures and Their Impact on the Coffee Sector Interim Report Background 1. Wi.” Webcache.googleusercontent.com, 2020, webcache.googleusercontent.com/search?q=cache:iUmajloZd5YJ:www.ico.org/documents/. Accessed 25 Feb. 2023.

[8]. Capps, Oral, et al. “A Cross‐Sectional Analysis of the Demand for Coffee in the United States.” Agribusiness, 18 Nov. 2022, https://doi.org/10.1002/agr.21779. Accessed 25 Feb. 2023.

[9]. Wei, Xiaoyun. “The impact of COVID-19 pandemic on transmission of monetary policy to Finance markets. “ International Review of Financial Analysis , vol.74, Mar. 2021.

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