The Strategist

Arabica coffee rises to highest price in almost seven years

07/28/2021 - 04:04

Exchange prices for Arabica coffee rose to the highest since 2014. Prices are rising amid abnormal frosts in Brazil, the world's biggest coffee supplier, which followed a severe drought. The extreme weather affected about 11% of crops in the country.

The value of Arabica coffee futures in trading on the Intercontinental Exchange exceeded $2 per pound, rising to the highest since October 2014. This was reported by Trading Economics. At its high for the day, coffee was worth more than $2.09 a pound. 

Arabica is rising in price amid worries about reduced supplies due to abnormal frosts in Brazil, the world's biggest coffee supplier, Trading Economics noted. Falling temperatures have been seen in the country's three key coffee regions of Paraná, São Paulo and Minas Gerais. 

The freeze followed the worst drought in nearly a century, which led to one of the biggest production declines in two decades, Trading Economics writes. Meanwhile, demand for coffee machines and instant coffee is rising and cafes are beginning to recover from the pandemic and inviting more visitors, the resource notes. 

According to Reuters, last week's severe frost damaged much of Brazil's 'coffee belt' crops and a new polar air mass could hit the same regions as early as the end of this week. This will be the third cold front to hit Brazil this year. 

According to preliminary estimates by Brazilian authorities, last week's frost affected between 150,000 and 200,000 hectares of fields - about 11% of the country's total Arabica crop area. "This is the first time since 1994 that the country has experienced such a weather event," coffee trader I & M Smith said in a review.