Why Your Morning
Coffee Is About to Become Even More Expensive
- July 28, 2016
morning cup of Joe may be about to get even pricier,
a Reuters poll of 11 traders and analysts showed on
the end of this year, both arabica and robusta coffee
are expected to hit their highest price since early
2015, driven by the global market's first supply deficit
in six years, along with firming currencies in top growing
nations and strong demand for coffee.
robusta, usually blended with higher quality arabica
beans or used in instant coffees, the survey was particularly
dramatic as El Nino-related dryness in southeast Asia
and drought in Brazil damaged crops and drained supplies,
coffee futures were forecast to rise to as high as $1,900
per tonne by the end of September and $1,985 by the
end of 2016, with year-end forecasts ranging from $1,575
would be up 10 percent from Wednesday, and a whopping
30 percent jump from 2015, its biggest annual gain since
of arabica coffee, used in espressos and brewed blends,
will rally to $1.45 per lb by the end of the third quarter
and to $1.60 by the end of the year, the median of estimates
showed, with expectations ranging from $1.20 to $2.20.
would be up 13 percent from Wednesday and a 26 percent
increase from 2015.
bean inventories in producing countries have already
dwindled, the threat of frost in Brazil next year and
rains in Vietnam due to the La Nina weather pattern
could spur greater price gains, said Shawn Hackett,
president of Hackett Financial Advisors in Boynton Beach,
kind of major weather threat could send ... coffee prices
back up to retest the 2011 highs near $3 per pound,"
said the Brazilian real, which rose to an 11-month high
in June, was also likely to drive the market. A strong
Brazilian real against the greenback discourages producer
selling of the dollar-traded commodity.
price forecasts mark a major about-turn from the outlook
at the start of the year.
still expected demand to outpace supply in 2015/16,
which would be the first time in six years according
to U.S. Department of Agriculture data. They reined
in their deficit forecasts from six months ago amid
a bumper Brazilian harvest.
median forecast for 2015/16 was for a 250,000-bag deficit,
with estimates ranging from a 7 million bag deficit
to a 5 million bag surplus.
2016/17, a balance was forecast though estimates ranged
from an 8 million bag deficit to a 10 million bag surplus.
is to harvest 55 million bags in 2016/17, as its arabica
regions recover from a second year of drought. That
compares with 43.2 million bags this year, according
to the International Coffee Organization (ICO).
would be a record, exceeding the previous all-time high
of 50.8 million grown in 2012/13.
output was pegged at around 45 million bags and robusta
at 12 million bags.
production in Vietnam, the world's biggest robusta grower,
was forecast at 26.5 million 60-kg bags in 2016/17,
with estimates ranging widely from 22.7 million bags
to 30 million bags. This compares with 27.5 million
bags in 2015/16, ICO data show.