The price of morning coffee is expected to increase significantly in the upcoming year, with potential for record highs, according to the Hackett Money Flow Commodities Report. The current price of coffee stands at $2.29, compared to the all-time high of $3.11 in March 1977. Consumers may need to cut back on other expenses, increase their income, or hope for a miracle to afford their daily caffeine fix.
An analysis of data from the U.S. Department of Agriculture reveals that global demand for coffee beans is at an all-time high, with consumption estimated at 170 million 60 kilogram bags for the 2023-24 season. However, inventory levels at the beginning of the growing season are at a low of 16% of consumption, the lowest in at least two decades. This leaves little wiggle room for any disruptions in coffee-growing areas, especially with unfavorable weather conditions affecting key regions.
Unfavorable weather conditions in Vietnam and Brazil, two of the largest coffee-growing countries, have impacted the production of coffee beans. Record heat in Vietnam’s coffee-growing areas and bone-dry weather have affected the flowering process and the conversion to cherries, essential for coffee bean production. Any further threats of adverse weather conditions could exacerbate the situation and lead to even higher coffee prices.
Investors looking to capitalize on the potential rise in coffee prices may consider stockpiling coffee or investing in long-dated futures contracts. However, caution is advised due to the volatile nature of futures markets, especially in light of extreme weather conditions affecting coffee-growing regions. The risk of a frost or other unfavorable conditions could lead to a major rally in coffee prices, potentially adding further strain to consumers’ wallets.
With the global coffee market in a precarious position, consumers may face the reality of paying more than ever for their favorite caffeinated beverages. Whether it’s a cappuccino, latte, or espresso, the cost of the morning coffee ritual is likely to increase significantly in the near future. This highlights the importance of being prepared for potential price hikes and exploring alternative options to manage expenses in the face of rising coffee prices. As the world grapples with a shortage of coffee beans and uncertain weather conditions in key growing regions, the future of the coffee market remains uncertain.
