Higher coffee prices could be here to stay

Coffee prices continue to rise, with the International Coffee Organization (ICO) reporting that its composite daily price went up by nearly 15 per cent in the last two weeks of July. The London-based industry body said that negative reports on the Brazilian crop continue to drive prices up, noting that several external sources issued lower production figures in July. The ICO said that the damage from the drought is expected to cause a global supply deficit in the 2014-15 crop year. It said that the world’s largest coffee grower will likely produce just 44.57 million 60-kilogram bags, a 9.3 per cent drop over last year, and the lowest level it has seen in three years. This is especially low, considering this is an “on-year” for Brazil, in the bi-annual cycle that sees production highs and lows. Prior to the drought, many were calling for Brazil to see its highest production figures to date. Roasters may now be looking to increase their prices to account for the shortfall. In its latest market report, Volcafe reported on “more news of retail coffee prices going up”, noting that roasters were looking to adjust to a higher coffee market. Notably Keurig announced on 15 August that its would be increasing the price of its portion packs by 9 per cent this November. It cited several factors affecting the cost environment, including an approxiamte 55 per cent increase in green coffee prices over the past year. 

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