In July, the price of coffee futures, the amount that large-order buyers pay for their coffee, doubled to $2 per pound. While futures have since receded slightly to $1.92, consumers may be facing higher prices in coffee shops and grocery stores in the coming months.
Coffee is already pricey for the average consumer, but the price increases seen by large-volume buyers don't always affect the prices seen by individual coffee drinkers. However, the price increases seen this year have been "unprecedented" according to Alexis Rubenstein, the managing editor of Coffee & Cocoa for StoneX Group.
"It's never been this perfect storm before. It's usually just been a supply-and-demand scenario," Rubenstein said. "We've never been dealing with a supply and demand issue on top of a logistics issue, on top of labor issues, on top of a global pandemic."
The first stage of that perfect storm was actually a drought: in Brazil, the world's largest supplier of the most commonly used coffee bean, coffee growers were hit by two July frosts following a period of the worst drought seen in 91 years, cutting the country's output of the popular Arabica bean significantly.
Industry experts like Robobank's Carlos Mera say that Brazil may have lost between 2 million and 6 million bags of coffee due to weather problems, roughly 12% of the country's total coffee output. Mera says those frosts are likely to impact the harvests in 2022 and 2023, as well.
Of course, like every other sector, coffee producers faced supply chain issues, staffing shortages, and skyrocketing shipping costs due to the COVID-19 pandemic, driving prices higher.
With such extreme increases, analysts are confident that consumers will also be seeing higher prices, but maybe not everywhere: according to Mera, while around half of the cost of a bag of coffee comes from the beans themselves, beans make up just 5% of the price tag on a cup of coffee in most large coffee shops.
Because of this, you might not need to fork up more cash for your latte, but you probably will pay more for your Folgers