Arabica coffee prices have risen to their highest levels in six years, driven by increasing signs of a global supply contraction of the beans favored by Starbucks. Futures contracts soared by 11% in New York to $1.95 per pound, the highest for the most active contract since November 2014. The cost of the world's most popular beverages has seen a continuous increase, raising broader concerns about rising food prices. Drought has already led to a decline in this year’s harvest yield. Additionally, two cold snaps in less than a month in Brazil— the largest coffee exporter— have reduced production prospects for the next season, as farmers will be forced to prune the trees.
Cold weather in the world’s largest coffee producer is fueling prices. Regis Rico, a manager at RR Consultoria Rural, stated, "We haven't seen a situation like this since the last frost in 1994... The extent of the frost was very large and very severe this time." Revived demand is exacerbating the supply crisis, while inventories dwindle. The U.S. expects Brazil's stocks to touch their lowest level in sixty years. Inventories are also declining in consuming countries—including the U.S., the largest buyer— at the same time that pandemic restrictions are easing and cafés are reopening. Additionally, logistical challenges, including high shipping costs, have adversely affected supply chains.
