London coffee prices set a new record

The price of coffee in London has reached its highest level since the beginning of futures trading.

The increase in demand coupled with a decrease in production in the biggest manufacturing nations caused the prices to go up.

RBC reported, citing Bloomberg, that the prices for Robusta coffee on Friday at exchange trading in London set a new record of $2,815 per ton, the highest since the beginning of trading in coffee contracts 15 years ago.

Since the start of the year, the cost of Robusta coffee has risen by over 50%. This is due to the fact that producers are unable to meet the ever-growing demand for cheaper coffee varieties, which is further compounded by high inflation across the globe.

Due to increasing costs, consumers have opted to purchase the more economical option of Robusta coffee instead of the pricier Arabica variety.

The El Niño phenomenon, combined with high fertilizer costs and drought, is expected to cause lower yields and keep the global coffee market in deficit for the third consecutive season in 2023-2024.

Confirmation from the U.S. Climate Prediction Center has been given that El Niño is back, a weather event that alters rainfall and temperature levels in the equatorial Pacific Ocean, making it warmer than usual.

It is anticipated that Vietnam, the biggest producer of Robusta in the world, will have its least abundant harvest in four years. To deal with the sharp increase in fertilizer costs, farmers in Vietnam have shifted their attention to cultivating more lucrative crops.

Due to adverse weather conditions, coffee production in Indonesia is predicted to drop by 20%, resulting in a decrease in the harvest in Brazil, the second largest producer of this variety.