**Fatshimetrie: Coffee prices surge in international markets due to dry weather conditions in Brazil, the world’s largest coffee producer**
Coffee lovers around the world may soon feel an additional pinch in their daily budgets due to the escalation of coffee prices in international markets. This upward trend is directly attributable to the persistent dry weather conditions in Brazil, the world’s largest coffee producer.
According to Fatshimetrie, coffee prices in South Africa have registered an increase of more than 20% on an annual basis since the beginning of the year. Paul Makube, agricultural economist at FNB, told the Mail & Guardian that this rapid increase has shown no signs of abating so far, due to the tight supply situation in global markets.
Brazil and Vietnam, which are the world’s first and second largest coffee producers respectively, are facing significant challenges in coffee production. Together, these two countries account for more than 70% of global coffee production, making their situation particularly critical during times of harvest difficulties.
Globally, coffee prices have soared by more than 70% this year, a substantial increase that has put pressure on consumers and coffee businesses. The International Coffee Organization noted that Robusta coffee bean prices hit a record high in August, with markets such as New York and London posting price levels not seen in decades.
Arabica coffee futures are currently trading around $3.1805 per pound, up 70% from a year earlier. Wandile Sihlobo, chief economist at the South African Chamber of Agriculture, said prices could remain elevated in the coming months, depending on whether supplies from Brazil recover.
Nestlé is forecasting a further increase in coffee prices next year, ranging from 30% to 40%, due to various factors such as weather conditions, supply chain disruptions and increasing logistics costs. Carl Khoury, Nestlé’s Executive Director for the Eastern and Southern Africa region, points out that crop yield declines due to drought are affecting overall supply and posing challenges in local markets.
Consumers may eventually feel a relief in their wallets if demand were to fall, but as long as supply remains scarce, prices will remain high. Short-term coffee scarcity may not be an issue yet, but if dry weather conditions persist, significant challenges could arise.
In summary, coffee lovers may need to prepare to pay a little more for their favorite beverage, and companies in the sector will need to navigate a volatile and uncertain market environment with caution. The future situation will largely depend on how well major coffee-producing countries can restore supplies to meet growing global demand.