The Looming Coffee Shortage Coffee prices surge as severe drought and floods hit world's largest coffee producers
By Emel Akan
This year will be the third consecutive year of supply shortage in the global coffee market
Bad weather caused by El Niño hurt robusta bean production by the world’s top two producers, Brazil and Vietnam.
And recently, excessive rainfall in Vietnam disrupted the harvest of this year’s crop, he said.
The price for robusta coffee in the London futures market surged nearly 60 percent in the last year and reached a five-year high in January. That move helped drive the price of arabica coffee in the New York futures market up 30 percent.
According to ICO, the total output for arabica and robusta beans will be 151.6 million bags for the current production year, which began in October 2016. The total global consumption, however, will be at 155.1 million bags, hence creating a supply shortage of 3.5 million bags of coffee.
The J.M. Smucker Co. (Ticker symbol: SJM) announced in January that it would raise the prices of its coffee products by about 6 percent in the U.S. retail stores.
Starbucks (SBUX) raised its prices twice last year.
Coffee is the most traded commodity in the world, following crude oil.
Brazil is the biggest coffee producer, producing one-third of the world’s coffee. And Europe is the largest importer of coffee, accounting for one-third of world’s coffee consumption.
Source: Epoch Times
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