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Surge in Coffee Prices

young worker sniffing a fistful of fresh raw beans from burlap bag at the coffee roaster warehouse

Consumer demand for packaged coffee rose in March. Weekly sales of the beverage in the United States increased as much as 73% from 2019, according to Nielsen. 

In fact, according to the International Coffee Organization’s (ICE) report in the week ended Apr 18, “panic buying and stockpiling” led to higher demand in some countries, upon a study of retail- and supermarket-level data. For example, spending on coffee in France surged 34.6% against the same period in 2019, while in Italy, spending rose 29.5%, as per data from Chicago-based market research company IRI.

Taking a look at ICE’s Coffee C Futures (U.S.), which is the world’s benchmark for Arabica coffee, one may note that the contract was priced at $117.950 for July 2020, at $119.100 for September 2020, at $120.500 for December 2020 and at $122.050 for March 2021. This gradual rise in coffee prices indicates growing demand for the beverage ahead.

Another reason for the increase in coffee prices is big brands such as Nestlé, JAB and Lavazza rushing to replenish their inventories of coffee beans, per the Financial Times. The higher quality arabica beans’ futures benchmark (traded in New York) has surged as much as 20% since the beginning of February to $1.20 a pound, putting it on the list of the world’s top-performing commodities.

source: zacks.com

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