Driven by supply concerns in top-producing countries such Brazil and Vietnam, coffee futures in New York jumped to their highest levels since 1997 on Monday. Popular for specialty brews, Arabica coffee surged as much as 3%, while robusta, often used in instant drinks, recently set its highest prices since the 1970s.
The considerable increase in coffee prices this year results from major disturbances in important growing areas. A protracted drought has harmed coffee trees in Brazil, which raises questions about a smaller crop next season. Though good rains in October that resulted in robust flowering, Rabobank analyst Guilherme Morya stated in a research that the dry and hot circumstances through September have already affected the potential for next year's arabica crop.
Morya noted, meanwhile, that there are concerns the blossoms would not fully develop into cherry, endangering the beans needed for manufacturing. For consumers as well as coffee roasters, the supply constraints have driven prices higher, therefore contributing to more general inflationary pressures in world commodities markets.
