DailySun
The price of coffee has hit unprecedented levels in New York, fueled by rising fears of a global supply shortage, establishing it as one of the year’s most coveted commodities.
Futures for the arabica variety, favored in specialty coffees, have surged by 80% this year due to agricultural challenges in key growing regions, potentially putting additional pressure on consumers’ budgets. On Tuesday, prices rose by up to 3.5%, hitting heights not seen since 1972, surpassing a peak from that era triggered by the catastrophic Black Frost that harmed Brazilian coffee plantations.
Worries about future supplies from Brazil, the leading producer, have heightened after a severe drought earlier this year. Furthermore, there are concerns regarding production difficulties in Vietnam—the top supplier of the robusta bean—where essential coffee-growing areas faced dryness during the growth season, followed by heavy rainfall at the beginning of the harvest.
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This price increase threatens to elevate expenses for roasters and cafés, which might have to transfer these costs to consumers. Under financial pressure, sellers have already raised their prices and cut back on discounts to protect their profit margins, cautioning that further increases could be imminent.
Currently, arabica futures are trading up 3.3% at $3.411 a pound in New York. Prices have surpassed the previous record set in 1977, during a turbulent period for the coffee market following the devastating frost in Brazil in 1975 that impacted future production.
The climb in coffee prices contrasts sharply with overall wholesale food costs, which remain significantly below their historical peak reached in early 2022 as a result of the Russian invasion of Ukraine. Nonetheless, so-called soft commodities are among the top-performing raw materials this year.
Cocoa prices have soared, reaching a new high in April in New York due to poor harvests in West Africa, which have created a significant global shortage and shaken the market. Additionally, orange juice futures are approaching record highs due to droughts and diseases impacting trees in Brazil, the primary producer. Florida, the leading orange juice-producing state in the US, has also seen production declines, with prices supported by hurricane-related damage.
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