The price of Arabica coffee on the commodity market reached its highest level in almost 50 years last week. On Friday, November 29, the price of Arabica reached an astonishing $3.31 per pound, its highest price since 1977. Who contributed to this record? Uncertainty.
The price fell just eight cents low of the all-time high set in April 1977 and has since fallen to just less than $3.00 per pound. As reported Traffic lightsthe main factors are bad weather in Vietnam and Brazil. Brazil, the largest producer of Arabica coffee, experienced “the worst drought in 70 years followed by massive rains” this year, raising fears of lower production next year. Meanwhile, Vietnam, one of the main producers of Robusta, has had similarly low production for three years in a row, further tightening supply. Robusta also records similar records.
In addition to concerns about climate change, the recent presidential election is also having an impact. The president-elect’s comments about massive tariffs have caused many in the industry to over-purchase now, fearing that the price of the same coffee will be much higher once January begins.
In general, the price of Arabica has increased by 72% since the beginning of the year..
And while this escalate is a welcome change – we should be paying more for coffee – even if it’s for generally terrible reasons, it’s still worth noting that $3.31 today equates to about $0.66 per pound in 1977 dollars. Today’s coffee would have to cost more than $17 a pound to equal the record high of $3.39 in 1977, taking inflation into account. Either way, the trend is positive, even though it’s not that record-breaking in context.
