After a sharp rise earlier this month, the top two U.S. roasters yesterday reduced wholesale coffee prices by 25 cents a pound, citing the drop in the price of green beans. The No. 3 company will follow suit Monday.
General Foods Corp., which commands 38 percent of the market, cut the wholesale price of a one-pound can of ground Maxwell House to $3.70 from $3.96. Last June, the same company was charging just $2.48 per pound. Procter & Gamble Co., which owns the Folger Coffee Co., also dropped the price of its premium brand to $3.70 a pound. Its previous price of $3.95 was set on Jan. 7. Instant coffee prices were not reduced as much. Hills Bros., owned by No. 3 Nestle Co., said a similar cut in its Hills Bros. brand would go into effect next week.
Since it takes about four weeks for wholesale price changes to reach the shelves, many grocery store customers may not experience such swings in the cost of their morning brew. Giant Food Inc. in the past two weeks raised the price of ground roast by 10 cents to $3.79.
Bob Rowe, the buyer for the Georgetown Coffee, Tea and Spice shop, said however that other wholesale prices continue to climb. The shop recently hiked its retail price 8 percent, or 50 cents per pound.
Coffee futures -- the price of unroasted beans -- hit a peak of $2.73 Jan. 7 in the upward spiral that began last fall on the news that Brazil was suffering a severe drought. Yesterday, the price on the Coffee, Sugar and Cocoa Exchange in New York backed off to $2.39 a pound for a 37,500-pound contract, matching the late December level. Traders mentioned the rains in Brazil as well as an agreement by the International Coffee Organization in London to permit unlimited export quotas.
"The price rose too rapidly before and a correction set in," said Milton Anderson, an international agricultural economist with the Agriculture Department. Yet he expects the price could go up again when new studies of the next Brazilian crop are completed next month by USDA and the Brazilian Coffee Institute.