International Coffee Day feels very different this year. Introduced by the International Coffee Organization on October 1, 2015, to raise ...
International Coffee Day feels very different this year. Introduced by the International Coffee Organization on October 1, 2015, to raise awareness of the product and the challenges faced by producers, the day has usually focused on how low prices paid for unroasted beans barely cover farmers’ costs – let alone support their families.
Not this year, though. In the past 12 months, the C price – the benchmark price for commodity-grade Arabica coffee on the New York International Commodity Exchange – has risen from $1.07 per pound (454g) to around $1.95. Back in July, it touched $2.08.
Nearly all contracts for coffee delivery are benchmarked against the C price, with the result that prices for green Arabica (unroasted beans) have risen by over 80% during the past year. Those for Robusta coffee – a cheaper, less palatable alternative – have risen over 30%. And there is every chance that these prices will rise higher in the coming months. We may be on the verge of a major price correction that shifts the market upwards for years to come.
Why it’s expensive
The principal reason for surging prices is a series of environmental events in Brazil. By far the world’s leading coffee producer, Brazil accounts for around 35% of the global harvest. The volume of...
