Coffee Prices Expected to Soar Still Higher

Prices have already doubled since December, with real threat looming for 2015.

May 05, 2014

NEW YORK – Coffee-lovers may soon have to fork over a lot more for their morning latte. Severe weather conditions have hit coffee crops in Central and South America, meaning global supply for 2015 is at risk, according to a report from CNBC.

Arabica coffee beans, the base for most coffee drinks, have faced two major supply shocks: inclement weather and "coffee rust," a disease which weakens coffee trees. Both are set to leave global production 7.1 million bags below demand, according to coffee analysts.

This shortfall will likely be met in the near term by carry-over stock that was held by farmers at the beginning of January, but that will leave insufficient supplies to deal with a deficit next year, should one occur.

Prices for coffee beans have doubled since December following patchy weather conditions, but "the threat is for 2015," coffee analyst at Marex Spectron, Steve Pollard told CNBC.

Coffee buyers, traders and agricultural experts will be visiting plantations in Brazil later this year to assess the situation. If reports suggest that weather damage has been severe, 2015 prices will rise considerably.

On the ICE, one of the main commodity exchanges, prices are currently trading at around $2.05 per pound, falling from the 26 month high of around $2.20 seen last week, which remained below the recent record high of $3.00 per pound seen in 2011.

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