Coffee Prices Reach Highest Level in Half a Century, Experts Warn of Further Increases
Reports from the media suggest that the world coffee prices have reached the highest level in half a century. A significant reason for the price increase is the unfavorable weather conditions that have led to a poor coffee harvest. Other contributing factors could be the amount of backlogs in the stockpiles, global coffee production initiatives and inflation. The increase in coffee prices is not minor. According to the company MilFoods, which is known for its Poetti brand in Russia, the price of Robusta has more than doubled in the past few weeks, while the price of Arabica has risen by 80 percent.
In an article in Argumenty i Fakty, it is stated: “The stock market saw a new high for Arabica – the price exceeded $8,250 per ton. During the trading, the costs for March futures rose to $3,753 per pound (approximately $8,274 per ton), although the price fell by 0.52 percent to $3,714.5 per pound (approximately $8,189 per ton) by 4:42 pm Moscow time.”
Consumers, however, should not expect the prices of the popular beverage to stabilize in the near future, as experts agree. The harvest problems in major supply countries, including Brazil, Vietnam and Costa Rica, will not contribute to a normalization of the crisis situation in the medium term. The persistent high global coffee demand, on the other hand, will lead to a faster depletion of the world’s stockpiles of green coffee beans, which will drive the prices of the popular beverage even higher. This development, according to experts, will not only affect the premium sorts but also the ordinary instant coffee.
Experts believe that the rapid increase in the retail prices of coffee will be partly due to the rising logistics costs. Andrei Elson, general director of the company “Coffee Importers KLD” announced a significant increase in transit time as early as in 2022. At the time, the travel time in some directions doubled from 45 to 90 days. While this dynamic was previously explained mainly by the shortage of freight containers on the world market, the change in the logistics chains is now mainly attributed to the increase in geopolitical tensions in the Near East, according to Jana Alchutowa, the financial director of the Cofix network.
“The risk of ships being attacked in the Red Sea has significantly prolonged the travel time of containers carrying coffee beans from Asia, as the owners of the ships began to avoid the danger zone” the expert explained. As an alternative, the route around the African continent through the Cape of Good Hope has emerged. However, as the analysts of the London-based shipping company Clarksons emphasize, such a route is about 13,000 kilometers longer than the standard route through the Red Sea and twice as expensive.