The perfect storm in Brazil and Colombia that has sent coffee prices skyrocketing

RIO DE JANEIRO, BRAZIL – The price of coffee is skyrocketing, and the situation has few signs of being resolved. The price of agricultural commodity futures has soared not only in the last week (accumulating a double-digit advance) but also over the last 12 months, with a rise of over 90%.

Therefore, buying good coffee has become more expensive and more complicated since it is not free from the crisis that is so fashionable in many sectors, such as supply problems.

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Arabica coffee futures have reached US$2.1675 per pound (0.454 kilograms) on the US stock exchange after a perfect storm of events that have weighed against consumers and have been seen as dangerous squalls by investors.

No wonder, since it has reached levels not seen in more than ten years. The price of the agricultural commodity has faced numerous stresses, and one of the latest has been supplying problems, globally, from Brazil to Vietnam as bad weather (drought and frost), supply problems, and higher fertilizer costs threaten a supply squeeze, which will put further upward pressure on prices, according to Bloomberg.

This is not the only element putting upward pressure on prices, as the collapse of production in Brazil, its leading producer, has been joined by the crisis faced by its second-largest supplier, Colombia, which is struggling in the face of excessive rainfall in the country, which threatens not only the quality of products but also its quantity since there is a risk of plant diseases damaging production.

If we look at coffee production figures in Colombia, this impact is already evident. In October, the extraction of coffee beans has been just over one million bags of 60 kilograms, which is 13% less than in the same period of 2020, as highlighted by the National Federation of Coffee Growers of the country. This situation has worsened during the last few months, as the accumulated figure for the first ten months has been 10.1 million bags, representing a drop of only 6%.

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