The international price of coffee climbed to its highest point on the New York Stock exchange since 2004 on Tuesday, according to international newswires, lifting an economic weight off the iconic industry’s back.
Concerns over production in drought-stricken Brazil, the largest exporter of coffee in the world, have been bringing the international price of coffee beans from $1.39 to $1.52 per pound in the US stock market.
In Colombia, one of the world’s biggest coffee exporters which recently posted a 15% increase in production, the internal price of coffee has subsequently risen 54.51% since January and currently exceeds $300 per 275 pound load.
The country’s coffee producers have been running at a loss in the last year with the high Colombian peso and low coffee prices spurred riots and social unrest twice last year.
Since then, the Colombian government has introduced a subsidy for the product.
MORE: Colombia coffee production hits 6-year high
MORE: Government subsidies generate employment in Colombia’s coffee region: Santos
Carlos Ignacio Rojas, president of the National Association of Coffee Exporters (Asoexport), explained that Brazil, currently experiencing a heavy drought in its main coffee regions, is “largely responsible” for the increasing price of the coffee bean, El Tiempo newspaper reported.
Recent official figures have forecast Brazilian 2014 to 2015 production — beginning in April — to between 46.53 and 50.15 million bags, which “would represent two consecutive decreases in Brazilian coffee production for the first time since 1977,” according the International Coffee Organization (ICO).
However, forecasts of rain in some of the Brazil’s coffee regions has traders speculating on the actual loss of the country’s production, which may not be as large predicted — newswire Reuters reported.
According to the ICO, the ongoing outbreak of coffee leaf rust in Central America is also affecting crops with production in Honduras down to 4.2 million bags, Mexico down to 3.9 million and Guatemala to 3.1 million.
Nicaragua, Costa Rica and El Salvador are all forecast to lower at 1.5 million, 1.4 million and 844,000 bags respectively.
On the other side of the world, constant heavy rain in Indonesia and Vietnam, the second largest producer of coffee in the world, has affected the production of Robusta coffee — different to the Arabica coffee grown in Colombia.
- Monthly Coffee Market Report (ICO Report January 2014)
- Precio de la carga de café ha subido 54.5 % este año (Portafolio)
- Carga de café superó la barrera de los 600.000 pesos (El Tiempo)
- SOFTS-Brazilian drought recovery concerns propel coffee to 1-year high (Reuters)