Robusta coffee prices have reached their highest level since 2008, according to Bloomberg. July futures for Robusta coffee on the London Stock Exchange on Friday, June 9, rose by 2% and reached $2,815 per ton. This is the highest level since coffee contracts began trading 15 years ago.
Robusta coffee prices have risen more than 50% since the beginning of the year due to increased demand, adverse weather conditions and higher fertilizer prices. The US Climate Prediction Center has confirmed the return of the El Niño phenomenon, and experts believe it could be moderate or even severe. This weather phenomenon is usually accompanied by heat and drought in the main Robusta coffee producing areas such as Vietnam and Indonesia.
Suppliers of Robusta beans, which are used to make instant coffee and espresso, are struggling to keep up with growing demand. Due to high inflation, consumers began to prefer more affordable coffees instead of more expensive Arabicas. This is due to the continued rise in food inflation in many countries, which has kept the prices of other popular breakfast items, such as orange juice and eggs, high.
Robusta coffee is usually cheaper than Arabica because Robusta is hardier and requires less maintenance, making it easier to produce in large volumes.
Coffee roasters are increasing the proportion of cheaper beans in coffee blends to offset higher costs for Arabica and electricity. Coffee producers are also trying to increase production. However, due to rising fertilizer costs and adverse weather conditions, yields are declining. As a result, the global coffee market is expected to be in deficit for the third consecutive year in the 2023-2024 seasons.
According to the agency, Vietnam, the world's largest producer of Robusta, reportedly had its lowest harvest in four years. Farmers in Vietnam have focused on growing more profitable crops such as avocados and durians to cope with rapidly rising fertilizer prices. The harvest in the second largest producer of robusta, Brazil, is forecast to decline by 5%, while Indonesia is expected to decline by 20% due to adverse weather conditions.