The global robusta coffee shortage is causing prices to soar to levels not seen in 16 years. This surge in prices is directly related to a significant decrease in coffee bean exports from Vietnam, the world’s second-largest producer of robusta beans. The country recorded a 50% drop in June exports compared to the previous year, totaling 70,202 tons, the lowest amount exported since the 2010-11 crop season. This decline in exports is primarily due to ongoing drought conditions that have been affecting coffee production in Vietnam.
Michael McDougall, managing director at Paragon Global Markets, highlighted that the dry weather in Vietnam continues to impact coffee production in the region. As a result of the lower export numbers from Vietnam, robusta bean contracts in London surged by as much as 3.5% to $4,500 per ton on Tuesday, marking the highest price recorded since data tracking began in 2008. Arabica futures in New York also experienced a 4% increase in response to the global coffee market trends.
It’s important to note that one-third of the world’s robusta beans are supplied by Vietnam. Robusta beans are commonly used in instant coffee and espresso production. Major coffee brands like Folgers, Dunkin’, Café Bustelo, Pilon, and Medaglia d’Oro, owned by J.M. Smucker Co., have already warned consumers about potential price increases due to the rising costs of coffee beans. This situation is likely to lead to elevated food prices across various brands in the near future.
In addition to the current robusta coffee shortage, there are other significant developments in the global coffee market that are worth following. For instance, there have been reports of hyperinflation in a different type of bean, not cocoa, indicating a broader trend affecting various commodities. Arabica coffee prices have also experienced the largest weekly jump in almost three years, adding to the volatility in the coffee market. These fluctuations are reflective of the challenges faced by coffee producers and traders worldwide.
As consumers, it’s essential to be aware of these market dynamics and potential impacts on the prices of everyday products. The interconnected nature of the global economy means that changes in one sector, such as coffee production, can have ripple effects on various industries. Keeping up to date with the latest developments in the coffee market can help individuals make informed decisions about their purchases and budgeting in the face of rising food prices.
