If you need your caffeine as much as I do each morning, be prepared to pay more for the best part of waking up. We coffee-lovers may soon have to fork out a lot more for a cup of java. Two major problems have hit coffee crops in central and southern America, meaning global supply for 2015 is at risk.
Arabica coffee beans, the base for most coffee drinks, have faced two major supply shocks: “coffee rust”, a disease which weakens coffee trees and inclement weather. Both are set to leave global production 11 million bags below demand according to coffee analysts. Each bag weighs 120 pounds, so that is a lot of coffee missing from the markets.
This shortfall will be met by carry over stock that was held by farmers at the beginning of January, analysts have said, but there are now insufficient supplies to deal with a deficit next year, should one occur – which is a threat due to El Nino weather patterns.
Make no mistake that the affects of the anticipated shortage are already evident on the commodities market. Prices for coffee beans have doubled since December following patchy weather conditions.
If the trees were producing normally, there would be a surplus situation. The question now is if trees in Brazil will produce normally in 2015. Because it is an unprecedented event of having a disease, drought conditions, and a major loss of production in the previous year, some expect coffee prices to double by next year with prices slowly rising through 2014.
Currently, about 90% of the coffee purchased for the US markets is grown in Brazil, where the weather and disease has affected crops. Coffee importers may look to Columbia for beans, but the prices have always been higher in that country, due to a better bean grown there.
Coffee buyers, traders and agricultural experts will be visiting plantations in Brazil later this year to assess the situation. If reports suggest that weather damage has been severe, 2015 prices will undoubtedly rise.
Currently, consumers haven’t seen the price increase reach the shelves yet. Coffee purchased previous to the price rise is still being shipped from warehouses, but when those supplies are gone the higher prices will be reflected in the stores.
Now may be the time to hoard coffee for next year.
Disclaimer: On January 4, 2016, the owner of WestEastonPA.com began serving on the West Easton Council following an election. Postings and all content found on this website are the opinions of Matthew A. Dees and may not necessarily represent the opinion of the governing body for The Borough of West Easton.
