Coffee's Climactic Crunch: Prices Hit Historic High!

Coffee prices have reached their highest in nearly 50 years due to bad weather in Brazil and Vietnam, affecting roasters and consumers. While farmers may benefit, traders are burdened by hedging costs. Roasters face challenges as consumers turn to cheaper brews amid rising living costs.

Global coffee prices have skyrocketed to their highest levels in half a century, driven by adverse weather conditions in Brazil and Vietnam. This surge has prompted major roasters like Nestle to increase prices, with consumers subsequently seeking more affordable options amidst mounting living costs.

The production issues, tied to Brazil and Vietnam's unfavorable weather, have resulted in a three-year trend of supply not meeting demand. Consequently, coffee stocks have dwindled, and ICE exchange prices have reached $3.36 per pound, a peak not seen since 1977. The inflation-adjusted shock to consumers in 1977 would equate to $17.68 today. Experts predict another year of subpar coffee production.

Brazil's arabica production, which constitutes nearly half of the world's supply, has been hit by severe drought, while Vietnam's robusta production faces challenges from alternating droughts and excessive rain. Trading entities like Atlantica and Cafebras are feeling the heat, resorting to court-supervised debt restructuring due to rising prices and market pressures.

(With inputs from agencies.)