Home > Coffee prices soar to 10-year highs, poised for more growth

Coffee prices soar to 10-year highs, poised for more growth

  • Coffee prices raced to highs of $2.48 per pound last week, its highest level since 2011.

  • Analysts say bad weather in Brazil and a flare in new Covid-19 infections in Vietnam could see production hit and lead to a tightening in prices.

  • As of 11:00 AM EST, coffee was trading at $2.3445 per pound, 0.5% higher

Coffee prices have soared to their highest level in a decade, with market observers saying the commodity could still surge to new highs.

The price of coffee beans has spiked more than 81%, with a year-to-date low of $1.20. This week has seen coffee contracts set for 20 December expiry soar above $2.34 per pound. The current prices are low after jitters in the global market hit in the aftermath of the omicron Covid-19 variant. This means prices have declined from last week’s highs of $2.48, a 10-year high.

Although the market remains vulnerable to a fresh bout of downside pressure given comments around the new variant and the effectiveness of available vaccines, dealers forecast prices to resume an uptrend once the market rides a potential pullback.

An analyst who spoke to CNBC said coffee is seeing a boost due to events in Brazil, Ethiopia and Vietnam, countries at the forefront of production and exports, but which could impact prices over the next two years.

In these critical countries, we have bad weather, the threat of civil war and the impact of Covid-19 as potential impacts to coffee price action, a commodity trader and strategist Ole Hansen said.

According to Hansen, tightness similar to that witnessed in 2011 would send the bean’s price higher, especially if output continues to slow down.

In April 2011, Coffee prices traded at $3.00 per pound but slipped amid market uncertainty to reach lows of $1.06 in October 2013 and then lower to $0.89 by May 2019. Prices are therefore likely to remain volatile but in an uptrend going into 2022, with market events from elsewhere helping to elevate demand, the analyst added.

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