The price of coffee on the commodities market here at the start of 2021 has been hovering around the $1.25, down from where it ended 2020 at $1.28, a three-month high. According to Forbes, though, 2021 may bring with it a significant increase in the per-pound price of coffee, but like with previous market increases, the reasons aren’t great.
If you’re experiencing a bit of déjà vu, it’s because we’ve written this exact same article before. Almost two years ago to the day, we talked about how the price of coffee on the C-market was expected to make a jump, rebounding from the abhorrently low $.94 to somewhere around $1.24 per pound, which it eventually did near the end of the year, to $1.32 in fact. And like in 2019, where the price increase was due from a decreased supply—low prices had disincentivized farmers from expanding production—the expected 2021 bump will be the result of yet another shortage.
Per Forbes, weather—rain in particular—in Brazil and Vietnam, the two largest coffee producers, will dictate the price. Both countries are expected to have their total tonnage decreased by bad weather: too much rain in Vietnam and not enough in Brazil. In Vietnam, where the harvest is currently underway, rains have put “the coffee bean harvest well behind pace,” which keeps producers from picking their crops at their ripest as well as properly drying them, both of which will have an effect on the output.
In Brazil, a lack of rain has “impacted initial coffee plant flowering,” though the extent of the impact is still unknown, per Forbes. There are some hopes that a catastrophe can be avoided with some January rain. If not, the commodity market price will skyrocket as the supply side takes a significant hit.
Yet again, good news for the price of C-market coffee comes for all the wrong reasons. Yes, a higher price per pound is good for farmers, but less so when it comes at the expense of their total output. That's why it's time to regulate the coffee market. So long as the price is set by those willing to cut off their own nose despite their face—if we keep paying less for a pound of coffee than it costs to produce, there won't be anyone left to grow it, never mind the morality of doing so—increase will only come through shortage, which generally comes from hardship. It's an unsustainable model. The center cannot hold.