This week I wanted to quickly discuss the drivers of recent coffee price rises. The common factor that coffee shares with all other commodities is turmoil in supply chains, effectively doubling delivery times, and significantly increased freight costs. Unique to coffee has been the crop conditions which Brazil (the largest producer of coffee beans globally) and Colombia have been experiencing. Last year Brazil suffered its worst drought in close to a century and this was followed by damaging frosts. Production has fallen by 30 percent. Colombia’s crop production has fallen by over 10 percent due to severe La Nina conditions. Coffee futures prices have recently doubled… and prices for premium coffee beans have increased even more significantly. Quality decaffeinated coffee beans are almost impossible to find in Australia with prices quadrupling for the last batches of supply.
Here’s a graph of Arabica prices on the International Commodity Exchange.
Here’s hoping that cups of coffee don’t really get to $7 in Australia!!!