World coffee prices have soared to their highest since 1997 on concerns about harvests in key supplying countries.
Points of attention
- Coffee prices have reached their highest levels since 1997, driven by supply issues and unstable weather conditions in major coffee-producing countries like Brazil and Vietnam.
- The record increase in coffee prices is primarily attributed to the damage caused to coffee trees by prolonged drought, leading to predictions of decreased production in the upcoming season.
- The high rate of coffee exports and low stocks in supplier countries are also influencing the price hike in the global coffee market.
- Analysts warn about potential disruptions in coffee supplies from Brazil due to the prolonged drought affecting coffee trees, which could further impact production levels.
- Despite fluctuations in wholesale coffee prices, the rise in coffee prices showcases the resilience of certain consumer goods in impacting consumer budgets.
What is known about the rapid growth of coffee prices in the world
It is noted that on November 25, Arabica prices increased by 3%. Due to supply problems and unstable weather conditions in countries such as Brazil and Vietnam, coffee prices are rising at a record pace.
Since 1970, prices for the robusta variety have also reached a record level.
Concerns are growing that supplies from Brazil will slow after a prolonged drought that has damaged coffee trees, which could lead to a reduction in production next season, analysts said.
What analysts say
In a report by Rabobank analyst Guillermo Moriah, next year's coffee harvest will be affected by a prolonged dry and hot period that affected Arabica crops planted before September.
An additional pressure factor is the possibility that the high rate of Arabica exports this year could lead to low stocks before the end of the current season. According to estimates by the US Department of Agriculture's Foreign Agricultural Service, coffee stocks in Brazil will reach only 1.2 million bags when the current season ends in June, which is 26% less than a year earlier, the authors of the material add.
Analysts said the rise in coffee prices shows that some consumer goods are still able to strain consumer budgets, even though wholesale prices for the product have eased from record highs seen in early 2022.
Arabica futures rose 2.4% to $3.0935 a pound as of 10:23 a.m. in New York. This year, prices have increased by 64%.
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