Lattes could become more expensive, as a key indicator of the price of the bean in espresso just hit an all-time high.
The Robusta coffee variety forms the basis of espresso and instant coffee. Vietnam produces the most Robusta, followed by Brazil.
A long El Niño-driven drought in Vietnam sent the price of Robusta futures to its highest level in at least 16 years on Wednesday, Bloomberg reported.
Vietnam produces more than a third of the world’s Robusta production, according to the U.S. Department of Agriculture. In December, the agency predicted that Brazil would harvest less Robusta this year due to climate concerns, while Vietnam would export less due to lower total reserves compared to last year. This year’s drought in Vietnam could prolong the cycle of low supply, hurting next year’s production.
Last month, the Vietnam Coffee Association said exports could decline by up to 20% in the 12 months ending in September, compared to the same period last year.
“We can’t say when prices will peak,” Tran Thi Lan Anh, deputy director of Vietnamese exporter Vinh Hiep Co, told Bloomberg. She said farmers and brokers believe the cost of beans could increase by 15% per kilogram compared to current prices.
The price of Robusta has also been pushed up by hoarding. Some Vietnamese farmers are not selling their coffee beans and are saving up to 13% of this year’s harvest in hopes of reselling their beans later, Bloomberg reported.
Vietnam is increasingly importing cheaper Robusta from Brazil to satisfy growing local demand from coffee drinkers, Bloomberg reported in March.
And as disposable income increases in Asia, consumers are also buying more coffee. Asian countries consumed 15% more coffee last year than in 2018 – the biggest increase of any region – but still far less than Europe, according to data from the International Coffee Organization.
It will take some time for higher bean prices to reach consumers – so the cost of your mocha is safe for now.
businessinsider
