By Harry Wilmerding
Coffee prices soared to a 10-year high on Monday, with experts projecting the high costs to last well into 2023, CNBC reported.
Coffee contracts for December hit $2.34 per pound at the end of Monday’s trading day, CNBC reported. Coffee futures on the New York Intercontinental Exchange soared to $2.46 on Thursday, recording the highest price since 2011.
Additionally, the International Coffee Association’s benchmark price reached $2.07 per pound Friday, surging 85% from the same date in 2020, according to CNBC.
Over the last 12 months, conditions created a “perfect storm” to drive up the price of coffee beans, especially poor weather in prominent growing regions, Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC.
“The question for future price action is how much of these developments are potentially longer-lasting,” Hansen said. “I think we need to focus on what’s been unfolding in Brazil this year, where we’ve had a generational low in temperatures, a very quick spell of frost which hit some of the growing areas, and we’ve had a period of drought — this has left the 2022 crop in a bit of a precarious state,” he said.
Poor weather may continue to put pressure on coffee prices and affect harvests in 2022 and even 2023. (RELATED: Judicial Watch Moves To Get Lightfoot To Discuss Racist Interview Policy Under Oath)
“We saw coffee rally to about $3 per pound back in 2011, when we had another Brazil scare,” Hansen said.
“These are really the kind of numbers that prompt the market to speculate whether we can reach those levels once again, and I think with Brazil in mind, and if the projections over the coming months continue to confirm a slowdown or reduction in output, then the risk of our brew getting more expensive is very real,” Hansen said.
Global supply chain disruptions also contributed to the surge in coffee prices as producers and consumers are located all across the world, according to CNBC.
Coffee has been engaged in “a huge price race that is predominantly driven by freight dislocations,” Maximillian Copestake, executive director of European coffee sales at Marex, told CNBC.
“For the last five to eight years, we’ve had supply [concentrated in] one or two big coffee-producing origins, one of them being Brazil, one of them being Vietnam,” Copestake said.