Vithanage Erandi Kawshalya Madhushani Jade Times Staff
V.E.K. Madhushani is a Jadetimes news reporter covering Business.
Coffee Prices Hit Record High: What It Means for Your Morning Cup
Coffee enthusiasts may soon face higher costs for their favorite brew as global coffee prices soar to unprecedented levels. On Tuesday, the price of Arabica beans, which dominate the global coffee market, surged to $3.44 per pound, marking an 80% increase this year. Meanwhile, Robusta bean prices reached an all-time high in September. The increase is largely attributed to poor weather conditions in Brazil and Vietnam, the two largest coffee-producing nations, coupled with growing worldwide demand.
Arabica and Robusta Prices Surge
Arabica, known for its smooth flavor and higher quality, has seen its price skyrocket due to dwindling supplies. Robusta, a stronger and more affordable alternative often used in instant coffee, has also experienced a steep rise in costs. With both varieties facing shortages, coffee traders predict the price pressure will persist well into 2025.
Impact of Weather Disasters in Key Coffee-Producing Countries
Brazil, which primarily produces Arabica, has been hit particularly hard. The country endured its worst drought in 70 years during August and September, followed by heavy rainfall in October, which has disrupted the flowering season and raised fears of crop failure. Similarly, Vietnam, the largest producer of Robusta, has experienced erratic weather patterns, including droughts and heavy rains, further diminishing coffee supplies.
“Concerns over Brazil's 2025 harvest are a major driver,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Coffee Brands Face Tough Decisions on Price Increases
Coffee giants like Nestlé and JDE Peet, the parent company of Douwe Egberts, have historically absorbed rising raw material costs to maintain customer loyalty. However, this strategy is reaching its limits.
Vinh Nguyen, CEO of Tuan Loc Commodities, warned that price hikes may hit supermarket shelves as early as the first quarter of 2025. Nestlé has already hinted at price adjustments and smaller package sizes during recent investor discussions. "We are not immune to the price of coffee, far from it," said David Rennie, Nestlé’s head of coffee brands.
The Growing Global Demand for Coffee
While supply issues mount, coffee consumption continues to grow worldwide. In China, for example, coffee consumption has more than doubled over the past decade, reflecting a broader global trend. Despite supply chain challenges, the drink’s popularity shows no signs of waning, further contributing to the price surge.
“Demand for the commodity remains high, while inventories held by producers and roasters are reported to be at low levels,” explained Fernanda Okada, a pricing analyst at S&P Global Commodity Insights.
What the Future Holds for Coffee Prices
The coffee market’s current trajectory suggests prices will remain elevated for some time. With inventory levels low and weather patterns increasingly unpredictable, producers and consumers alike face a challenging road ahead. For coffee lovers, this could mean more expensive trips to the café or higher grocery bills.
Whether you prefer a specialty Arabica brew or an instant Robusta fix, the brewing global coffee crisis may soon make your morning cup a little more costly.
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