Robusta bean prices have soared to their highest level since 1970.
Coffee prices are systematically rising around the world. At the same time, the risks associated with counterfeit products are increasing. Both elite Arabica beans and more affordable Robusta varieties are becoming more expensive.
Bloomberg writes about this.
As noted, both elite Arabica beans and more affordable Robusta varieties are becoming more expensive. This is due to interruptions in supplies from Vietnam to Brazil. Sellers are raising prices and refusing discounts to protect their margins, and many are warning of an upcoming increase.
At the same time, prices for Robusta beans have soared to their highest level since 1970. While higher-quality Arabicas were the most expensive in two years earlier this month.
The rise is partly due to bad weather. Drought in robusta-growing Vietnam has left the world with a fourth straight shortage, while dry weather in Brazil has reduced the Arabica harvest as damaged trees produce smaller beans. The gap between the futures prices of the two varieties is forcing companies to look for lower-quality Arabicas to cut costs, leaving cafes with no choice but to raise prices.
It's not just the weather that's pushing up prices, though. Rising demand in markets like China is keeping the market on edge. There's also a growing awareness that coffee traders and roasters have long underpaid farmers, with some buyers trying to reverse that trend. Higher profits are incentivizing growers to grow coffee instead of other crops. If coffee prices don't rise for producers, they have no reason to maintain long-term production.
Recall that a 27-year-old electrician from Zhitomir became a millionaire after being inspired by a Facebook video.
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