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Don't panic. But there could be a global coffee shortage. Usually, during this time of year, the delicate Arabica coffee plants in the mountains of...

1.the worst drought in decades hit Brazil's coffee belt region, destroying crop yields and causing the price of coffee to shoot up by more than 50 percent so far this year." Explain why the price of coffee would rise in this case by explaining what impact this has on the demand and supply model of the coffee market.

 2"At the beginning of the year, a closely watched report by a commodities trading firm noted that the global coffee market could face a shortage for the first time in three years. The report predicted that coffee supplies will be about 5 million bags lower than consumption for the 2014-15 season." Explain using the supply and demand model what a shortage means and how it could lead to higher prices.  "

3.it used to be that the developing world made coffee and the developed world drank it. But now, countries like Brazil, which traditionally only produced coffee, are starting to consume it, too." Use the supply and demand model to make a prediction about what will happen to price and quantity in the market for coffee as new consumers enter the market.

Don't panic. But there could be a global cofee shortage. Usually, during this Tme oF year, the delicate Arabica cofee plants in the mountains oF Brazil, where most oF the world's cofee comes From, are maturing. White, Fragrant ±owers have appeared, Followed by cherrylike Fruit, each containing two seeds: Arabica cofee beans, the most popular in the world. But last month, the worst drought in decades hit Brazil's cofee belt region, destroying crop yields and causing the price oF cofee to shoot up by more than 50 percent so Far this year. ²he drought is historic, with more than 140 ciTes in Brazil Forced to raTon water. ²he country's leading newspapers reported that some neighborhoods are receiving water only every three days. ³or now, retail prices For cofee are stable. Roasters typically have enough supplies to cover themselves For a Few months. But iF the price oF the Arabica beans conTnues to rise, consumers could start seeing the cost oF their morning cofee creep up later this year, according to Jack Scoville, a Futures market analyst specializing in grains and cofee, among other commodiTes. On Wednesday, the price per pound oF cofee For delivery due in March reached the highest point in about 14 months, at $1.72. Even beFore the drought, though, there were concerns that there would be a global cofee de´cit. At the beginning oF the year, a closely watched report by a commodiTes trading ´rm noted that the global cofee market could Face a shortage For the ´rst Tme in three years. ²he report predicted that cofee supplies will be about 5 million bags lower than consumpTon For the 2014-15 season. ²he predicTon was an about-Face From what experts were saying at the end oF last year, when there appeared to be a cofee glut. ²here was so much cofee last year that Arabica cofee Futures Fell by nearly 25 percent. Over the long run, though, experts say that the price oF cofee will rise For one simple reason: More people in developing markets like Brazil, India and China are acquiring a taste For it. "Regardless oF what happens in Brazil now . . . we will see higher prices and more compeTTon For higher-quality cofee," said Kim Elena Ionescu, a cofee buyer and sustainability manager For Counter Culture, the in±uenTal North Carolina-based cofee roasTng company. Ionescu said that it used to be that the developing world made cofee and the developed world drank it. But now, countries like Brazil, which tradiTonally only produced cofee, are starTng to consume it, too. "More people are drinking cofee," said Ionescu. "And more people are drinking beµer cofee." She added that cofee producTon is hard to mechanize, and so it's likely that demand will conTnue to outstrip supply. On top oF that, there are concerns that climate change could damage supplies, as well, with some poinTng to Brazil's drought as evidence oF the more extreme weather becoming the norm. "What we are really seeing as a company as we look 10, 20, 30 years down the road - iF condiTons conTnue as they are - is a potenTally signi´cant risk to our supply chain, which is the Arabica cofee bean," said Jim Hanna, Starbucks' head oF sustainability, in an interview with the Guardian in 2011. And For those who like sugar with their cofee, the drought in Brazil, which is also the world's biggest producer oF sugar, is disrupTng plans For harvesTng sugar cane. ³utures prices For sugar are at nearly the highest level in two months. Word count: 588
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Brazil coffee assignment.docx

Brazil's coffee
1. why the price of coffee would rise
Demand and supply of commodities are the major drivers of prices of
commodities. in the case of Brazilian coffee, the drought hilted the...

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