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Marketplace®

Daily business news and economic stories

Bad news for your morning: The price of coffee is higher than it’s been in almost half a century

Drought in Brazil and heavy rains in Vietnam have devastated coffee crop yields.
Drought in Brazil and heavy rains in Vietnam have devastated coffee crop yields.
Aphotografia/Getty Images

A bit of tough news for those of us who wake up early: The price of coffee just hit a 47-year high. It’s gone up by more than two-thirds so far this year. We haven’t seen prices like these since the late ’70s, when snow destroyed much of Brazil’s coffee crop.

This time, it’s not snow, though it is still the weather.

Only two countries grow most of our coffee, according to analyst Kenneth Shea with Bloomberg Intelligence: Brazil and Vietnam.

“Like any agricultural crop, it could be disrupted,” he said. “And weather is usually the big reason.”

So, if like this year, you get a major drought in Brazil and heavy rain in Vietnam, “supplies will be really, really low,” Shea noted.

When that’s happened in recent years, coffee roasters have kept prices down by mixing those low supplies with older stock. That only works for so long though, noted Tomas Araujo with StoneX Financial.

“And we went into this year with the lowest stocks in around 20 years,” he said.

The easiest way out of this is with a good crop and good weather. But as climate change makes extreme weather more common, “we will see more coffee price volatility and price volatility in similar sorts of perennials,” explained Cornell professor Chris Barrett.

And that means stuff that we get from perennial plants, including tea and chocolate, could also remain volatile.

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