The coffee market is in a constant state of flux and change. The causes of constant changes are seasonal yields, climatic factors (heat or frost), diseases and pests of coffee trees, and logistical factors. In 2021, several strong factors influenced the growth of exchange prices for green coffee.
General Market Overview
The general trend in 2021 is a steady rise in prices in the run-up to a sharp instability in world coffee production compared to 2020.
So, all last year the price of 1 pound on world exchanges varied in the range of 96-130 cents. Prices in the previous two years were around 95-110 cents per pound. As a result, the coffee business in the biggest part of the world has become almost unprofitable, forcing new generations of farmers to refocus on growing other crops.
Reasons For Rising Prices For Coffee In 2021
Summer frosts in Brazil – farmers reported losses of up to 70% of all trees on plantations that needed to be cut down and replanted. All this will lead to the fact that coffee production in Brazil in 2022 is expected to be only 55.3 million bags, while in 2020, it was 60 million, and in 2021 – 69 million.
Lockdowns worldwide have reduced the purchase prices and needs of many countries in 2020. However, exits from lockdowns, which began everywhere in mid-2021, are pushing prices up – people are once again switching to coffee outside the home, as opposed to the trend of drinking at home.
Problems with coffee delivery logistics. Containers left the ports of the producer countries for the ports of the largest coffee buyers but did not return in the same quantities, creating a shortage of containers on the ground. This prevents further loading and dispatch.
Political strikes in Colombia – one of the largest coffee producers. Shipment of farm coffee from the country is actually blocked for a month or more.
The growth rate of the Brazilian Real has been about 15% over the last year. Now you have to spend the same amount of dollars or euros to buy coffee.
Pandemic problems with the collection of coffee due to the lack of seasonal workers. The result is a reduced quality of coffee harvested, as fewer workers harvest all grains – both green and ripe.
An increase in the price of green coffee will also lead to an increase in the price of a cup. In general, the price of a cup of coffee will grow by a maximum of 5-7%. In 2022 the cup will rise in price by 10%. In order not to dramatically increase the cost of a cup of coffee, coffee shops can use their stocks or switch to cheaper coffee. However, the rise in prices is inevitable.