Bloomberg — Global supply woes from Brazil to Vietnam sent coffee prices to a seven-year high in New York with poor weather, freight snarls and higher fertilizer costs threatening to curb supply.
Arabica futures for March delivery rose as much as 2.6% to $2.189 a pound in New York, the highest since Oct. 16, 2014. Prices have soared more than 90% in the past year.
Brazil, the top grower, has faced plunging production after drought and frost damaged trees, while second-ranked arabica supplier Colombia is struggling with excess rain that cut yields and threatens to bring plant disease. Soaring fertilizer prices are adding to farmers woes while elevated freight costs, and a lack of container ships are hindering efforts to export beans.
The surge in futures threatens even higher prices at cafes and grocery stores when food inflation is worsening. Some companies have already increased prices and higher costs may further hit consumer pockets. U.S consumer prices rose in October at the biggest annual rate in 30 years, according to government data.
La Nina will likely increase in strength over the next three months before fading some time in 2022, according to the U.S. Climate Prediction Center. The climate pattern could have powerful impacts on agriculture markets in South America, where crops could face dryer conditions.
Adding to the pressure on farmers, Brazilian fertilizer prices face further upward pressure from increased global export restrictions and steady demand, according to Bloomberg Intelligence.