Coffee futures in New York have reached their highest level since 1997, driven by concerns over poor crop conditions in key producing countries like Brazil and Vietnam. Arabica prices rose 3% on Monday, with robusta hitting its highest since the 1970s.
Coffee futures in New York surged to their highest level since 1997, driven by concerns over crop conditions in leading producing countries. This development poses potential cost increases for both coffee roasters and consumers. Arabica, the premium coffee variety preferred for specialty beverages, saw prices rise by up to 3% on Monday. This year, coffee prices have skyrocketed due to supply disruptions in major producers such as Brazil and Vietnam. Notably, robusta, commonly used in instant coffee, recently reached its highest price point since the 1970s.
Brazil’s coffee production outlook has sparked worries following an extended drought that damaged coffee trees, which could impact next season’s harvest. “The potential for next year’s harvest has certainly been impacted by the long dry and hot period that affected arabica coffee crops until September,” Rabobank analyst Guilherme Morya stated in a report. Despite October rains leading to “excellent flowering” of the trees, concerns persist about whether the flowers will fixate on branches. This fixation is crucial, as these flowers develop into cherries that house the coffee beans.
Adding to these concerns is the robust pace of arabica exports, which could deplete stockpiles by season’s end. The US Department of Agriculture’s Foreign Agricultural Service projects Brazil’s coffee inventories to drop to 1.2 million bags by June, marking a 26% decline compared to the previous year.
This coffee price rally underscores how certain agricultural commodities continue to strain consumer budgets despite an overall decline in wholesale food costs from their early 2022 peaks. Sellers along the supply chain have already increased prices and reduced discounts to maintain margins, with indications of further hikes ahead. As of 10:23 a.m. in New York, arabica futures rose 2.4% to US$ 3.0935 per pound, reflecting a 64% increase this year.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.