The staggering impact of falling coffee prices
Global coffee prices staged a small rally at the end of May, rising by around 10% as they bounced off a 15-year low of $0.867 per pound.
Where it stands: That rally was short-lived and has since reversed, including a 6.2% fall for futures prices last Wednesday. Now coffee is again trading below $1 a pound, less than half the value it fetched 5 years ago, because of a flood of beans from leading producer Brazil, which is falling into recession and has seen its real currency weaken.
- In an unusual market twist, the falling prices of coffee beans could lead to higher coffee prices for Western consumers.
What's happening: "Many growers around the world are having to abandon their farms or turn to illicit crops such as coca. This, in turn, is casting doubt over the future sustainability of supplies — and could, ultimately, prove costly for consumers," Chelsea Bruce-Lockhart and Emiko Terazono of the Financial Times write.
- "Consumers might assume that at least part of any price increase for their morning cup of coffee is passed on to the farmer. But in an everyday £2.50 [$3.18] brew, the coffee itself accounts for just 4 per cent of the cost, or about 10p, while rent, labour and tax make up three-quarters of the overall price, according to consultancy firm Allegra Strategies."
The big picture: Coffee's downturn also is adding to the historic flow of migrants to the U.S. from Central America, another major coffee bean hub, the Washington Post's Kevin Sieff points out.
- "Since 2017, most farmers have been operating at a loss, even as many sell their beans to some of the world’s best-known specialty-coffee brands.
- "A staggering number of those farmers have decided to migrate."
Go deeper: The scientists saving coffee