Coffee Arabica Nears Decade High Amidst Supply Setbacks
So much has been written recently about the global energy crisis and the soaring price of crude oil, that it has overshadowed the rising price of another commodity, which may have gone unnoticed by many, even though, chances are, most of you reading will have used it at least once today already.
That commodity is coffee and its arabica variety is currently trading at an almost ten-year high, rising more than 88% since the beginning of April.
So, what exactly is happening with coffee arabica prices?
The recent rise in coffee prices is mainly down to a drop in global supply, which, itself, is the result of a combination of several factors.
Brazil, which is the largest source of arabica in the world, had its coffee production significantly hampered this year due to adverse weather conditions in the form of drought and frost.
This problem has been further exacerbated by recent truck driver strikes in Brazil, delaying the delivery of the beans that they have been able to produce.
Naturally, there are other countries which produce arabica. Take, for example, Colombia, who are the second largest arabica producer in the world. However, Colombia has been battling with its own weather woes, with this year’s crop being severely threatened by excessive rains.
Between them, Colombia and Brazil are responsible for more than half the world’s arabica, meaning that any issues with their production significantly impacts global supply.
If this wasn’t enough, fertiliser prices have soared this year - significantly increasing farmers’ production costs, whilst Covid-19 has caused a global shortage of shipping containers, hindering exports and increasing their cost.
Taking all this into account - the drop in global supply and the rising costs of production and distribution - coffee arabica prices are likely to remain high for the time being and it would not be surprising if they increase even further in the coming weeks.
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