2021 has been a good year for the price of coffee on the commodities market. Starting around the middle of March, where the price hovered around the $1.20/lb mark, coffee has surged over the past few months, closing yesterday at $2.26/lb, over a dollar higher than where it was just eight months ago.
If you’ve read any of our articles in the past on the coffee market rallying, you may know what’s coming next. The price surge has nothing to do with investors taking a newfound interest in fair pay or quality. It is due to uncertainly on the supply side.
As reported by Nasdaq, the setbacks the coffee supply chain faces are global and multi-faceted. We have reported on many of these issues in the past: unexpected frost and shipping shortages in Brazil, protests in Colombia halting shipping, COVID-19 lockdowns affecting production in both Vietnam and Colombia, and coffee farmers across the globe defaulting on deliveries in order to take advantage of the higher market prices.
This has led to significant uncertainty in the markets. While the demand for coffee remains steady, how much will be available—and from where—is a question that has nearly doubled the price of Arabica coffee.
And it’s not just Arabica; Robusta is seeing record-high prices as of late. Robusta recently peaked at $2,303/tonne (roughly $1.04/lb), its highest peak since January 2011.
Unfortunately, once—or perhaps if—these mitigating factors begin to normalize and the coffee supply rebounds back to stasis, the prices will again plummet. Even when the prices are good, farmers aren’t fully able to capitalize on them. It’s reaching a point that, for as long as it is tied to the commodities market, growing coffee will be a losing proposition.
Zac Cadwalader is the managing editor at Sprudge Media Network and a staff writer based in Dallas. Read more Zac Cadwalader on Sprudge.