Arabica Coffee Hits Its Highest Price In 47 Years — And It Could Climb Higher
First, it was $5 lattes. Then $7. Now, across the nation, many coffee shops are serving up $9 lattes. And as if that’s not bad enough, your morning cup might soon get even pricier. Drought and high temperatures have hurt production of coffea arabica, the world’s most popular coffee variety, setting the wrong kind of record.
- Arabica futures rallied to their highest price since 1977, rising 75% this year to $3.3545 per pound, driven by concerns over shortages in this year’s crop.
- Nestlé ($NSRGY), the world’s largest coffee producer, said it would raise prices and shrink bags given higher prices — while giants like Starbucks have responded by abandoning hedges to cope with the soaring costs.
It’s only getting hotter: Adding more pressure, the EU’s new regulations will require coffee producers to prove that their output is not linked to deforestation. This is expected to push arabica prices higher and affect coffea robusta — the more bitter, high-caffeine alternative — which has also seen significant price gains.. In the long run, climate change poses a major risk to the long-term stability of coffee supplies. In response, the specialty coffee industry is exploring new coffee species that could rival the two global staples.
