Coffee prices rose on Friday to their highest level in 47 years, driven by indications of poor harvests in Brazil due to drought.
On the London ICE exchange, the price of a pound (0.45 kilograms) of arabica was up 0.7 percent after noon compared to yesterday’s closing, amounting to $3.25. It briefly touched $3.35, the highest level since 1977.
Since the beginning of the year, arabica has increased by about 75 percent and ranks among the agricultural commodities with the largest price jumps, alongside cocoa, whose price has nearly doubled.
– The price trend (for coffee – ed. note) is very similar to the trend for cocoa at the beginning of the year, and the reasons for the increases can also be compared. In the case of cocoa, the cause is poor harvests in the two leading global producers, Côte d’Ivoire and Ghana. In the case of arabica, there are fears of a weak harvest in the largest producer, Brazil, next year due to drought conditions – states Commerzbank in a note published on Friday.
Traders also note that some Brazilian growers have postponed deliveries of this year’s harvest in hopes of achieving higher purchase prices, which has caused a short-term supply shortage and significant financial losses for traders.
Brazilian coffee traders Atlantica and Cafebras announced on Wednesday that they would negotiate with creditors in court, highlighting that they have not received the announced 900,000 bags of coffee weighing 60 kilograms each. The prices of cheaper robusta, which is often used in the production of instant coffee, also reached the highest level in approximately 47 years on the ICE exchange on Friday, at $5,694 per ton, before subsequently dropping to $5,503.
