Posted on 07/27/2021 5:43:02 AM PDT by blam
Arabica coffee futures surged more than 9% to $2.094 per pound, the highest since October 2014, on Monday after forecasts call for more cold temperatures in Brazil, the world's top grower.
Weather models show that another cold snap is imminent for Brazil and likely to produce crop-killing frost across southern Minas Gerais through central Sao Paulo, east-central, and south Parana, from Wednesday to Friday, Maxar meteorologist Donald Keeney told Bloomberg.
#Coffee rallying 10% more today after gaining near 20% last week due to damage to trees in Brazil and expectation of more cold in coming days. Graph by @RuralClima #Sugar cane areas could also be hit #agriculture #weather pic.twitter.com/BOhL7Gvvor — Marcelo Teixeira (@tx_marcelo) July 26, 2021
"It looks like we're set for another explosive week ahead, with cold weather coming back into coffee-growing regions from midweek onwards," Alex Boughton, a coffee trader at Sucden, wrote in a note to clients.
In one week, arabica futures prices are up 34%.
We noted the first round of frost began early last week. New forecasts via Reuters suggest last week's frost damaged up to 200,000 hectares (495,000 acres) of arabica coffee fields or 11% of Brazil's total arabica coffee area.
Damaged Coffee Plants In Minas Gerais
Coffee trees are sensitive to cold weather—about 70% of Brazil's arabica coffee is grown in the central Minas Gerais region.
Brazil accounts for approximately 40% of the global coffee trade. The prospect of a decline in production for 2022 suggests coffee prices could go higher.
Judy Ganes, a coffee consultant, told Bloomberg that prices could eventually touch $3 per pound.
"Where is the coffee going to come from" if the output from Brazil lapses, Ganes said. She noted Brazil accounts for 40% of world output.
Besides the freak cold snaps, coffee trees in Brazil were already weakened by drought.
At least 64% of American adults consume coffee every day. The adverse weather conditions in South America will result in coffee inflation that coffee chains will either have to eat and undergo margin compression or pass along to consumers.
Because Starbucks uses 100% Arabica beans to make their coffee, this could mean prices at one of the US' most popular coffee chains could skyrocket.
World's Oranges, Coffee At Risk As Brazil Runs Out Of Water
Freak Cold Snap In Biggest Coffee Exporter Sparks Huge Price Surge
That global warming is something else.
This has happened before. It always results in a smaller package for more money....and it never reverts. We’ll go from 12 oz to 10.
Been buying a few extra cans of our favorite brand with each trip to the store ( cocoa powder & vanilla extract too ) for over a year now. I’ve watched the prices almost double.
Not fancy stuff, but we like it and it keeps well.
Got enough for our needs,
Or, maybe I should sell it now and double my money?
Better give those racoon-like animals in Indonesia laxatives to get them pooping out coffee beans faster. I think they are called civets.
Double your money. FWIW, we had a family friend who worked at the local Piggly Wiggly tell us the first things that sold out after the market reopened following a severe four day blizzard in March 1966 was coffee and cigarettes.
It went over $3/lb in 1977.
That would be well over $14/lb in today’s dollars.
I bought a pack of coffee just before this. If the prices continue up, I’ll use what I have & then quit drinking it, I guess. When I was working & we had a shortage of help, our wages didn’t go up. The demand for our labor didn’t lessen. I see a coffee shortage(or other shortages) as nothing more than a convenient excuse to raise prices.
Remember the toilet paper shortages?
Keep it.
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