Coffee Fundamentals, a tipping point ? / Australian real estate has peaked emailed to subscribers - Sat, 08 Mar 2008

Something to watch perhaps...

Interest rates going higher, but we have to have a place to live, so we do our best to hang on and pay more interest. Oil prices rocketing but we have to drive most places if you live out in the 'burbs, so we continue to fill up the tank. But coffee prices at $4, perhaps $5 a cup? Might just be the thing that pushes public anger over the top and we stop spending.
Usually it is the smallest of things (after a succession of bigger things) that brings on a tipping point. Just something to ponder this year.

I am now prepared to suggest that Australian property prices have peaked. I can't base that call on science, just from a knowledge of the cycle repeating, as follows:

We know that Fred Harrison has good evidence for the 18-year cycle running 14 years up, 4 down. This happened for the third time in a row in the US and UK, since 1955. Australian property prices last lowed around the end of 1993, or in 1994, later than in the US and UK, so the timing from this point of view looks good. We know too that land prices go vertical at the end. This they have done.
In previous cycles in Victoria, (and without doubt elsewhere, but it is only Victoria that I have picture evidence for), especially Melbourne, a worried government pays out the land speculators in a bid to free up more building sites and bring down the price. Good sign of a top... See Age26thJul1972.pdf [ There will be an article about this going up on the site next week. This is nothing but a direct gift to land speculators that have been holding land off market in expectation of higher prices, so expect quid pro quo and some of the profits to find their way back to you know where. One speculator has seen his ten acre (idle) plot go from $238,000 to $11 million, now that a subdivision can occur. Meantime, the federal government looks at ways to cut the budget by cutting out disabled carer payments...]

It is sold to us this way:

Also out of interest:

"plans for a massive population expansion beyond the city fringes", smells like visions of cities in the cornfields if you ask me... as the mums and dad speculators rush out now and buy up in advance.

The Sydney Morning Herald said this (today, March 8): "The southern capital is reclaiming its title Marvellous Melbourne, a tag by which it was known internationally in the 1880s when its population, boosted by the gold rush, was bigger than Sydney's."
That's a 120 year echo might I say.

And don't forget the lavish government expenditure...

Then read here:

Note points 9, 10 and 11. Now ain't that something...

Robusta coffee for delivery in May advanced $29, or 1.1 percent, to $2,752 a metric ton as of 10:21 a.m. on the Liffe exchange, the highest since Sept. 4, 1995. Prices have gained 10 percent in the past week.

The increase has prompted buying from roasters, who don't have enough beans for future production and were waiting for prices to decline, Kerr said. Reduced sales from the main producing countries of Vietnam and Indonesia, where farmers have been hoarding supplies in anticipation of higher prices, has crimped supply.

``The producing countries, which are the poorest of the poor, are being greedy as hell,'' Kerr said. ``These are the highest prices we've seen in 12 years and they're still not selling.''

Coffee Inventory

Robusta coffee stockpiles in Europe have fallen 2.2 percent since Feb. 11 to 131,540 tons. Warehouses monitored by the London exchange had 26,308 lots of 5 tons each in storage yesterday, compared with 26,906 lots on Feb. 11, Liffe said on its Web site.

Arabica futures for May delivery in New York rose 1 percent to $1.6850 a pound and have gained 21 percent this month.

World coffee production of between 123 million and 125 million bags will be just enough to meet demand in the year to October 2009, keeping stockpiles near record-low levels, according to the London-based International Coffee Organization

Age 26th July 1972 - PDF

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