Rapidly rising coffee prices may lead to consumers worldwide paying more for their daily caffeine fix.
For the first time in 34 years, prices for coveted arabica beans have broken through what analysts call a “psychologically important” $3 per pound level. Coffee prices were last in this range in 1977 after a deep frost destroyed the Brazil crop.
Since the beginning of 2011, coffee prices have risen 23.6% and are up a staggering 117.2% since January of 2010. The International Coffee Organization (ICO) warns that the tight market will likely continue to “support high price levels,” especially considering coffee inventories are at 50 year lows.
Columbia, the world’s largest producer of Arabica beans, is forecasting a lower than expected harvest, as are Brazil, Mexico and other coffee producing Central American nations.
The tight market has translated into direct price increases for consumers. JM Smucker, the US company that makes Folgers coffee, has raised retail prices three times over the past year and may do so again if prices continue their rise according to a report from the Financial Times. Read more…