Coffee prices are crashing. What it means for your cup of joe
Futures on coffee are tumbling. However, this may not have a significant impact on the cost of your cup of coffee.
Arabica coffee futures traded at $2.43 per pound in August. On Wednesday, the price plummeted to $1.59, a 35% decrease.
Carlos Mera, head of Rabobank’s agri-commodities markets team, provided several explanations for the consistent decline in prices.
The weather in Brazil has improved significantly over the past few years. This fall’s precipitation indicates that the country will have a successful coffee harvest, ensuring supply.
“September typically marks the beginning of the rainy season,” Mera explained. The beginning of this wet season was actually quite favorable.
The dollar’s strength is another factor.
“Everything measured in dollars, such as international coffee prices, tends to decrease when the dollar appreciates,” Mera explained. Farmers outside the United States are incentivized to sell their products because a price in US dollars translates to a greater amount of local currency.
Mera stated, “Farmers are more eager to sell any stocks they may hold.”
The situation has drastically changed since the previous year.
Coffee futures reached their highest level since January 2012 in November 2021. Due to extreme drought and unusual frost conditions in Brazil, the market was thrown into disarray.
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Source: Coffee Talk