Coffee prices on the stock exchange are at their highest in a decade and could rise further, analysts say. The impact of uncertainty and insufficient coffee supplies will continue into next year due to a combination of vital factors for the coffee industry.
Firstly, there are harmful weather effects in Brazil, such as frost and drought. In addition, another essential export country, Ethiopia, is on the brink of civil war, making coffee production even more unstable. In Vietnam, production could again be affected by rising numbers of Covid-19. Colombia is also experiencing export and international transport problems due to the pandemic.
The price of green, unroasted coffee on the New York Stock Exchange is now climbing to 2.50 dollars per half a kilo. Compared to last year, prices had almost doubled and are at the highest level since 2011, when they were above three dollars.
Analyst Ole Hansen of Saxo Bank pointed out that a crop failure in Brazil was the tip of the iceberg for this year’s “perfect storm” of factors that made a cup of the popular drink more expensive.
Data from the Czech Statistical Office shows that traders are waiting for a more significant increase in prices. According to the latest data, coffee rose by an average of 4.5% more than last October and by 11% more than last September. Sugar prices also had an enormous rise of 17% in October. Meanwhile, average inflation in the Czech Republic is now 6%.
“Higher coffee prices can be expected in the following years to come, as the reasons that led to the current price increase will remain unchanged,” Czech analyst Petr Havel confirmed.
“Restrictions on trade routes will continue due to the persistence of regulations related to the prevention of coronavirus risks. The increase in wages paid to workers on coffee plantations, as well as an increase in the cost of transport, packaging materials, and other components, are key factors for the current situation too, ” he described.
Havel predicted that the price growth dynamics could slow down only a little because of the favorable weather conditions in the central coffee-producing countries in the following period. However, even with favorable weather, coffee prices in the Czech Republic will still rise due to higher energy prices for roasting coffee and an increase in the general inflation rate, he concluded.