Coffee prices reach 10-year high, and likely to go much higher

Dec. 6, 2021

London’s International Coffee Association’s benchmark price closed at $2.09 per pound on Friday, Dec. 3, up 85% from a year earlier on the same day. Columbia milds, or arabicas, closed at almost $3 a pound while robustas were inched up $1.12 per pound on ICO’s indicator price index.

On New York’s Intercontinental Exchange (ICE), at the end of last week, coffee futures hit $2.46, the highest price since 2011, when the crop broke above $3 per pound.

ICE’s Coffee C contract is the world standard for arabica coffee. The contract prices physical delivery of exchange-grade green beans, from one of 20 countries of origin in a licensed warehouse to one of several ports in the U. S. and Europe, with stated premiums and discounts for ports and growths.

Alexander Hansen, chief operator officer of Tropiq, a Norwegian company that buys high-grade, specialty coffee for European roasters, observed, “over the past 12 months we’ve seen the market price grow over 100% for commercial grade coffees and 20% to 30% for specialty.”

Hansen cites the following reasons:

  • Frost in Brazil, leading to lower yields.
  • Global shortage of containers.
  • Port congestion.
  • World coffee production forecasted down 11 million bags.
  • Increased consumption and 20-year low greens stocks.

Additionally, according to a report at CNBC, uncertainty is stemming from such exporting countries as Ethiopia, which is on the brink of a civil war, and Vietnam, where a rise in new COVID-19 cases could bring back another period of lockdowns that would hit production.