Why are coffee prices trading near half-century highs?

Why are coffee prices trading near half-century highs?

Global coffee prices have soared to their highest in nearly 50 years due to poor weather in Brazil and Vietnam, forcing roasters such as Nestle (NESN.S), opens new tab to raise prices and consumers to hunt for cheaper brews amid the cost of living crisis.

Spiking prices will benefit farmers with the crop this year, but challenge traders who face crippling hedging costs on exchanges and a scramble to receive the beans they pre-bought.

WHAT DRIVES PRICES?

Production problems linked to bad weather in Brazil and Vietnam have seen global supplies lagging demand for three years. That has left stocks depleted and driven benchmark ICE exchange prices to a peak of $3.36 per lb.

Last time coffee traded that high was in 1977 when snow destroyed swathes of Brazil’s plantations. However, the shock to consumers was much bigger back then. If adjusted for inflation, $3.36 per lb in 1977 would be equivalent to $17.68 today.

Experts are meanwhile predicting yet another year of lacklustre coffee output.

Brazil, which produces nearly half the world’s arabica – high-end beans used primarily in roast and ground blends – experienced one of its worst droughts on record this year.

Although rains finally arrived in October, soil moisture remains low and experts say the trees are producing too many leaves and too few of the flowers that turn into cherries.

In Vietnam, which produces some 40% of the robusta beans typically used to make instant coffee, a severe drought earlier this year was followed by excess rains since October.

Consultancy StoneX sees Brazil’s arabica output falling 10.5% to 40 million bags next year, offset somewhat by higher robusta output, thus cutting the country’s overall crop by 0.5%.

In Vietnam, the crop could shrink up to 10% in the year by the end of September 2025, adding to the global robusta shortage.

Brazil-based traders Atlantica and Cafebras are seeking court-supervised debt restructuring due to coffee price surges, crippling hedging costs and delivery delays.

Court-supervised debt restructuring precedes bankruptcy if the negotiation is not successful.

Traders who buy beans from local suppliers like Atlantica and Cafebras typically take short positions in the futures market to hedge their physical market exposure.

Fearing they might no longer get their physical coffee, many traders are closing out what have become loss-making short futures positions.

Closing out short positions involves buying or going long futures, which in turn drives prices even higher.

Higher futures prices then push up margin calls or downpayments that traders are required to pay to protect against trading losses, thereby creating more stress in the industry.

IMPACT ON ROASTERS AND CONSUMERS

Surging coffee prices are a problem for roasters. The boss of Nestle, the world’s biggest coffee firm, was ousted earlier this year after the board grew unhappy about weak sales and a loss of market share due to price rises, which prompted consumers to switch to cheaper brands.

Roasters tend to buy coffee many months in advance, which means consumers will likely see the price spike in 6 to 12 months.

Consumers who drink out will feel less of a pinch of today’s rising prices.

Roasters like Starbucks (SBUX.O), opens new tab that sell mostly to cafes should fare better as the global coffee price accounts for only about 1.4% of the total price of a typical $5 cup of coffee in a cafe.

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[:ar]Privacy Policy for qahwa world At qahwaworld, accessible from qahwaworld.com, one of our main priorities is the privacy of our visitors. This Privacy Policy document contains types of information that is collected and recorded by qahwaworld and how we use it. If you have additional questions or require more information about our Privacy Policy, do not hesitate to contact us. This Privacy Policy applies only to our online activities and is valid for visitors to our website with regards to the information that they shared and/or collect in qahwaworld. This policy is not applicable to any information collected offline or via channels other than this website. Our Privacy Policy was created with the help of the Free Privacy Policy Generator. Consent By using our website, you hereby consent to our Privacy Policy and agree to its terms. 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These technologies are used to measure the effectiveness of their advertising campaigns and/or to personalize the advertising content that you see on websites that you visit. Note that qahwaworld has no access to or control over these cookies that are used by third-party advertisers. Third Party Privacy Policies qahwaworld's Privacy Policy does not apply to other advertisers or websites. Thus, we are advising you to consult the respective Privacy Policies of these third-party ad servers for more detailed information. It may include their practices and instructions about how to opt-out of certain options. You can choose to disable cookies through your individual browser options. To know more detailed information about cookie management with specific web browsers, it can be found at the browsers' respective websites. 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Privacy Policy for Qahwa World

At Qahwa World, accessible from https://qahwaworld.com, one of our main priorities is the privacy of our visitors. This Privacy Policy document contains types of information that is collected and recorded by Qahwa World and how we use it. If you have additional questions or require more information about our Privacy Policy, do not hesitate to contact us. This Privacy Policy applies only to our online activities and is valid for visitors to our website with regards to the information that they shared and/or collect in Qahwa World. This policy is not applicable to any information collected offline or via channels other than this website. Our Privacy Policy was created with the help of the Free Privacy Policy Generator.

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Qahwa World follows a standard procedure of using log files. These files log visitors when they visit websites. All hosting companies do this and a part of hosting services' analytics. The information collected by log files include internet protocol (IP) addresses, browser type, Internet Service Provider (ISP), date and time stamp, referring/exit pages, and possibly the number of clicks. These are not linked to any information that is personally identifiable. The purpose of the information is for analyzing trends, administering the site, tracking users' movement on the website, and gathering demographic information.

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Like any other website, Qahwa World uses 'cookies'. These cookies are used to store information including visitors' preferences, and the pages on the website that the visitor accessed or visited. The information is used to optimize the users' experience by customizing our web page content based on visitors' browser type and/or other information. For more general information on cookies, please read the Cookies article on Generate Privacy Policy website.

Google DoubleClick DART Cookie

Google is one of a third-party vendor on our site. It also uses cookies, known as DART cookies, to serve ads to our site visitors based upon their visit to www.website.com and other sites on the internet. However, visitors may choose to decline the use of DART cookies by visiting the Google ad and content network Privacy Policy at the following URL – https://policies.google.com/technologies/ads

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Advertising Partners Privacy Policies

You may consult this list to find the Privacy Policy for each of the advertising partners of Qahwa World. Third-party ad servers or ad networks uses technologies like cookies, JavaScript, or Web Beacons that are used in their respective advertisements and links that appear on Qahwa World, which are sent directly to users' browser. They automatically receive your IP address when this occurs. These technologies are used to measure the effectiveness of their advertising campaigns and/or to personalize the advertising content that you see on websites that you visit. Note that Qahwa World has no access to or control over these cookies that are used by third-party advertisers.

Third Party Privacy Policies

Qahwa World's Privacy Policy does not apply to other advertisers or websites. Thus, we are advising you to consult the respective Privacy Policies of these third-party ad servers for more detailed information. It may include their practices and instructions about how to opt-out of certain options. You can choose to disable cookies through your individual browser options. To know more detailed information about cookie management with specific web browsers, it can be found at the browsers' respective websites.

CCPA Privacy Rights (Do Not Sell My Personal Information)

Under the CCPA, among other rights, California consumers have the right to: Request that a business that collects a consumer's personal data disclose the categories and specific pieces of personal data that a business has collected about consumers. Request that a business delete any personal data about the consumer that a business has collected. Request that a business that sells a consumer's personal data, not sell the consumer's personal data. If you make a request, we have one month to respond to you. If you would like to exercise any of these rights, please contact us.

GDPR Data Protection Rights

We would like to make sure you are fully aware of all of your data protection rights. Every user is entitled to the following: The right to access – You have the right to request copies of your personal data. We may charge you a small fee for this service. The right to rectification – You have the right to request that we correct any information you believe is inaccurate. You also have the right to request that we complete the information you believe is incomplete. The right to erasure – You have the right to request that we erase your personal data, under certain conditions. The right to restrict processing – You have the right to request that we restrict the processing of your personal data, under certain conditions. The right to object to processing – You have the right to object to our processing of your personal data, under certain conditions. The right to data portability – You have the right to request that we transfer the data that we have collected to another organization, or directly to you, under certain conditions. If you make a request, we have one month to respond to you. If you would like to exercise any of these rights, please contact us.

Children's Information

Another part of our priority is adding protection for children while using the internet. We encourage parents and guardians to observe, participate in, and/or monitor and guide their online activity. Qahwa World does not knowingly collect any Personal Identifiable Information from children under the age of 13. If you think that your child provided this kind of information on our website, we strongly encourage you to contact us immediately and we will do our best efforts to promptly remove such information from our records.[:ru]Privacy Policy for qahwa world At qahwaworld, accessible from qahwaworld.com, one of our main priorities is the privacy of our visitors. This Privacy Policy document contains types of information that is collected and recorded by qahwaworld and how we use it. If you have additional questions or require more information about our Privacy Policy, do not hesitate to contact us. This Privacy Policy applies only to our online activities and is valid for visitors to our website with regards to the information that they shared and/or collect in qahwaworld. This policy is not applicable to any information collected offline or via channels other than this website. Our Privacy Policy was created with the help of the Free Privacy Policy Generator. Consent By using our website, you hereby consent to our Privacy Policy and agree to its terms. Information we collect The personal information that you are asked to provide, and the reasons why you are asked to provide it, will be made clear to you at the point we ask you to provide your personal information. If you contact us directly, we may receive additional information about you such as your name, email address, phone number, the contents of the message and/or attachments you may send us, and any other information you may choose to provide. When you register for an Account, we may ask for your contact information, including items such as name, company name, address, email address, and telephone number. How we use your information We use the information we collect in various ways, including to: Provide, operate, and maintain our website Improve, personalize, and expand our website Understand and analyze how you use our website Develop new products, services, features, and functionality Communicate with you, either directly or through one of our partners, including for customer service, to provide you with updates and other information relating to the website, and for marketing and promotional purposes Send you emails Find and prevent fraud Log Files qahwaworld follows a standard procedure of using log files. These files log visitors when they visit websites. All hosting companies do this and a part of hosting services' analytics. The information collected by log files include internet protocol (IP) addresses, browser type, Internet Service Provider (ISP), date and time stamp, referring/exit pages, and possibly the number of clicks. These are not linked to any information that is personally identifiable. The purpose of the information is for analyzing trends, administering the site, tracking users' movement on the website, and gathering demographic information. Cookies and Web Beacons Like any other website, qahwaworld uses 'cookies'. These cookies are used to store information including visitors' preferences, and the pages on the website that the visitor accessed or visited. The information is used to optimize the users' experience by customizing our web page content based on visitors' browser type and/or other information. For more general information on cookies, please read the Cookies article on Generate Privacy Policy website. Google DoubleClick DART Cookie Google is one of a third-party vendor on our site. It also uses cookies, known as DART cookies, to serve ads to our site visitors based upon their visit to www.website.com and other sites on the internet. However, visitors may choose to decline the use of DART cookies by visiting the Google ad and content network Privacy Policy at the following URL – https://policies.google.com/technologies/ads Our Advertising Partners Some of advertisers on our site may use cookies and web beacons. Our advertising partners are listed below. Each of our advertising partners has their own Privacy Policy for their policies on user data. For easier access, we hyperlinked to their Privacy Policies below. Google https://policies.google.com/technologies/ads Advertising Partners Privacy Policies You may consult this list to find the Privacy Policy for each of the advertising partners of qahwaworld. Third-party ad servers or ad networks uses technologies like cookies, JavaScript, or Web Beacons that are used in their respective advertisements and links that appear on qahwaworld, which are sent directly to users' browser. They automatically receive your IP address when this occurs. These technologies are used to measure the effectiveness of their advertising campaigns and/or to personalize the advertising content that you see on websites that you visit. Note that qahwaworld has no access to or control over these cookies that are used by third-party advertisers. Third Party Privacy Policies qahwaworld's Privacy Policy does not apply to other advertisers or websites. Thus, we are advising you to consult the respective Privacy Policies of these third-party ad servers for more detailed information. It may include their practices and instructions about how to opt-out of certain options. You can choose to disable cookies through your individual browser options. To know more detailed information about cookie management with specific web browsers, it can be found at the browsers' respective websites. CCPA Privacy Rights (Do Not Sell My Personal Information) Under the CCPA, among other rights, California consumers have the right to: Request that a business that collects a consumer's personal data disclose the categories and specific pieces of personal data that a business has collected about consumers. Request that a business delete any personal data about the consumer that a business has collected. Request that a business that sells a consumer's personal data, not sell the consumer's personal data. If you make a request, we have one month to respond to you. If you would like to exercise any of these rights, please contact us. GDPR Data Protection Rights We would like to make sure you are fully aware of all of your data protection rights. Every user is entitled to the following: The right to access – You have the right to request copies of your personal data. We may charge you a small fee for this service. The right to rectification – You have the right to request that we correct any information you believe is inaccurate. You also have the right to request that we complete the information you believe is incomplete. The right to erasure – You have the right to request that we erase your personal data, under certain conditions. The right to restrict processing – You have the right to request that we restrict the processing of your personal data, under certain conditions. The right to object to processing – You have the right to object to our processing of your personal data, under certain conditions. The right to data portability – You have the right to request that we transfer the data that we have collected to another organization, or directly to you, under certain conditions. If you make a request, we have one month to respond to you. If you would like to exercise any of these rights, please contact us. Children's Information Another part of our priority is adding protection for children while using the internet. We encourage parents and guardians to observe, participate in, and/or monitor and guide their online activity. qahwaworld does not knowingly collect any Personal Identifiable Information from children under the age of 13. If you think that your child provided this kind of information on our website, we strongly encourage you to contact us immediately and we will do our best efforts to promptly remove such information from our records.[:]
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