Between April 2020 and April 2021, arabica prices increased by 12% to US 122.03 cents/lb. For the following 17 consecutive months, coffee prices rose to over US $2/lb for the first time in ten years, before dropping to an average US 194.78 cents/lb last month.
Philip von der Goltz is the Managing Partner at green coffee trader List + Beisler.
“We’ve seen coffee prices almost double over the last six months,” he says. “In April 2021, prices ranged between US 120 cents and 140 cents/lb.
“Following on from April 2021, coffee prices peaked at US 260 cents. It’s stressful for all companies in the coffee industry because the cost of goods has increased substantially,” he adds.
The reasons for price increases are complex, but they are largely attributed to unfavourable weather conditions, declines in production in major coffee-producing countries, and logistical issues related to Covid-19.
As well as Brazil – the world’s biggest coffee producer – coffee production in Colombia has been steadily declining over the last few years. A 2018 United States Department of Agriculture report stated that the country’s production volumes fell to 14.2 million 60kg bags after five years of growth, mainly because of higher levels of rainfall. This trend has continued into this year, with Colombia’s 2022 production figures down 15% on the same period in 2021.
“There are also rises in sea freight prices,” Philip explains.
Bloomberg reported in July 2021 that the shipping container prices have more than doubled as a result of Covid-19 and steep increases in freight demand.
“Then, there are also the rising costs of in-country transportation,” he adds. “There’s tight supply in an already tough situation because of the frost in Brazil, and now we have high inflation rates and the invasion of Ukraine.”