market | IST

Coffee prices at 4-year high, here's why

Coffee prices are trading at a four-year high, especially Robusta, above $2,040 a tonne owing to impact from bad weather and supply bottlenecks due to COVID-19

Coffee prices are trading at a four-year high, especially Robusta. It is trading above $2,040 a tonne. It is at a 4-year high and it was only in the month of July that Arabica coffee traded at 7-year highs as well.
There are concerns when it comes to the producing countries in the sense of adverse weather. It also has to do with logistical bottlenecks because of the COVID-19 restrictions.
Brazil is a topmost producer of coffee and unseasonal frost in Brazil is hitting the crop there. The output this year is expected to decline to the lowest in two decades. The expectations are that the next 2 to 3 years as well, we could be looking at lower coffee crop in Brazil.
Vietnam is the second largest grower after Brazil and it is Robusta that Vietnam grows. Because of the lockdown restrictions in the exporting provinces, there have been supply concerns and Vietnam has not been able to export a lot of coffee and that is the reason you have seen the prices go up in the international markets.
The third largest producers is Colombia, and there also, there are supply disruptions because of a series of anti-government protests. The local prices in Colombia for coffee have hit an all-time high in the month of May and yet again in July.
India while is the seventh largest producer of coffee and 70 percent of Arabica that we produce is exported, so we stand at an advantageous position right now.
The coffee crop also gained around 12 percent in the previous year, and the markets do believe that the rise in prices could help the coffee producers in India.
It also means that the coffee prices from here on are steadily going to increase at least for the next year or so.