News
Coffee · Commodities · Drought · Inflation
Global coffee prices surged to record highs, with Arabica jumping 70% and Robusta doubling, as severe droughts in top-grower Brazil and adverse weather in Vietnam drastically reduced bean supply, impacting major brands like Nescafé and Folgers and prompting price increases for consumers.
Brazil's arabica harvest is short by as much as a quarter, according to Volcafe, following one of the worst droughts on record. This follows earlier severe drought and heavy rains in Vietnam, the top robusta grower.
Scientists attribute these shifting weather patterns to climate change. Over the past year, arabica costs jumped 70%, and robusta doubled, with futures prices for arabica surpassing the 1977 record of $3.35 per pound.
Financial speculators also contributed to the price surge. Major supermarket brands, including Folgers, Maxwell House, and Nescafé, already raised prices.
J.M. Smucker, Folgers' parent company, reported coffee sales growing 3% in November despite two price hikes in June and October, indicating undeterred consumer demand. Coffee consumption is not slowing, even increasing in producing countries like Brazil, Indonesia, and Vietnam, further reducing export availability.
Importers Brian Phillips of Anthem Coffee Imports and John Cossette of Royal Coffee believe futures prices will settle somewhat but state "the days of cheap coffee are gone forever." They note that alternative sources from Honduras, Mexico, or Peru are becoming more competitive. This situation contrasts with cocoa, where volatile weather in Ghana and Ivory Coast drives record-breaking price surges due to limited growing regions.
