Arabica coffee futures are about to register their largest annual gain in a quarter-century due to a global deficit.
Arabica coffee futures jumped 78% to about $2.30 per pound in New York this year, putting it on track for the best year since 1994.
"Severe weather in Brazil, the world's largest arabica supplier, decimated coffee plantations, contributing to a global shortage just as demand for the high-end variety of beans expanded. That coincided with supply chain bottlenecks including container shortages and longer shipping times,"
We first documented the tightening of global supplies on Mar. 25 in a commodity note titled
""Nightmare" Of Factors Pushing World Into Coffee Deficit."
Since then, the situation has become even more severe.
So what does this mean for the wallets of US consumers?
According to a recent Barclays note, US importers like Starbucks are hedged out for more than a year to deal with price fluctuations. Though JM. Smucker, which owns the Folgers and Dunkin' coffee brands, recently warned that supply chain disruptions are rising costs that will impact its business.
It's only a matter of time before coffee inflation strikes consumers in 2022.