Brewing trends: unpacking the reasons behind soaring coffee prices

Ole Hansen
Head of Commodity Strategy

Summary:  Coffee is hot right now - not only in temperature but also in price movements. Learn why coffee prices are rising and how this affects both consumers and traders as we explore the intricate balance of supply, demand, and market dynamics.

Understanding the increase in coffee prices

What’s causing coffee futures prices to go up? A key reason for the change, particularly for the robusta bean mostly grown in Southeast Asia, is that Vietnam faced a tough drought last year. This didn't just affect coffee prices but also pushed up the price of sugar. Due to this, there was less coffee produced, but people still wanted their coffee. This mismatch between demand and supply is pushing prices higher – a common situation in markets.

How rising coffee prices affect consumers and traders

As coffee prices go up, different people are affected in different ways. For those who enjoy a daily coffee, the good news is that the cost of coffee beans is only a small part of the price we pay for a cup. Therefore, consumers won’t feel a direct impact from this when they visit their local coffee shop.

For traders, it's a big deal. The price of coffee beans has jumped by 60% over the last year, which has a big impact on the market and creates new opportunities for trading. Traders should be watching these price changes closely, as there is a lot of movement in the market, and therefore a lot more opportunities.

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