Morning coffee is a luxury that most of us use to wake up. And if things continue like this, this statement will become true. This is because we have had bad months for the coffee world and experienced price increases for both Robusta and Arabica varieties. The latter made news because its price has skyrocketed: 70% more so far this year.

This is the highest level since 1977 and the bad thing is that this does not appear to be a temporary thing due to what is happening in the main producing countries and climate change.

Record. The data is devastating: On the New York Stock Exchange this week, we saw Arabica beans rise 4.7% to $3.23 per pound, more or less a pound. Such prices have not been seen since 1977, but New York’s situation is not unique. According to what we read in the Financial Times, the price of Robusta beans in London increased by 7.7% and reached $5,507 per ton. Almost double the prices at the beginning of this year.

Arabica is in trouble. This is generally the highest quality variety. Like Geisha, it is among the most expensive coffees in the world, and it is in serious trouble: production has fallen this year due to poor harvests caused by climatic events shaking Latin America.

Brazil and Colombia are two havens for this variety, but the country’s recent drought will wreak havoc on next year’s season. There are producers who claim that there are plants that have already died before they bloom, and that they have only been able to obtain 100 bags of the 120 bags of grain they expected to harvest this season. This is something that increases prices, we have an example. Colombian. The price of 125 kilos of dry parchment coffee costs 1,360,000 pesos in 2023, that is, approximately 302 euros. Now the same shipment costs 2,200,000 pesos, or about 488 euros.

It’s very solid too.. More of the same with Robusta. We have already said that in the first quarter of this year the value of grain increased by almost 170% in the last decade. This was the highest value in almost 30 years, as the International Coffee Organization admitted in one of its market reports. This is a problem because we are seeing a massive increase in just a few months. On July 8, Robusta grain prices in London reached $4,300 per tonne.

Now, as we said, they are $1,200 more per ton. There are a few issues to consider here. One of these is the Red Sea crisis, which prevents container ships bringing Robusta mainly from Vietnam from using short routes. Another is the climate, as the drought that hit the Asian country reduced production.

short term crisis. Both Arabica and Robusta have an impressive market. Arabica is often available in specialty varieties, but Robusta is cheaper and is in high demand by users both for coffee blends and instant coffee. Demand continues to grow, and with increasing interest in coffee, China has also entered the equation.

Giuseppe Lavazza, president of the Lavazza group, said that he has not seen such a price increase so far, but this is only the beginning, because all the components we have mentioned will be responsible for the grain prices not stopping to rise. At CincoDías we see that analysts are already pessimistic about the next season because despite excellent flowering due to rains in Brazil, “there are concerns that these flowers will not stick to the branches, which may lead to production losses.” next season.”

Like toilet paper in a pandemic. This increase in coffee prices is also due to coffee roasters. According to what we read in the Financial Times, in anticipation of possible bad harvests in the next two seasons, buyers are bringing forward their orders and purchasing more. And of course, when there is so much demand for the same product, prices also increase.

Around the world, especially in Europe, there is a rush to source raw materials for roasters. This is because new European Union legislation, delayed by a year, will require buyers to prove that the coffee they import was not grown on deforested land. And clearly, if European roasters are buying to secure next year’s stocks, North Americans are no less eager to secure shelves before prices continue to rise.

And Trump came. All this—legislation, desire to buy, high shipping costs, and poor harvests due to weather—is a perfect storm with one more ingredient missing: the arrival of Donald Trump in the White House. Carlos Mera, head of agricultural products at Rabobank, told the FT: “If you are a roaster and think there will be tariffs on coffee, you will try to import now. Otherwise, you will pay the tax later.” Theorizing about Trump’s accusations that he has promised to scrap foreign products.

Additionally, Mera stated that this increase in raw materials, for which roasters pay the initial price, will be more “painful” for consumers, that is, the end user, as it will be reflected in the product.

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