El Niño Could Make Your Cup of Coffee More Expensive as Robusta Beans Prices Surge

The weather event usually brings hotter and drier conditions to main robusta growing regions; the crop in Brazil, the No. 2 producer of the variety, is expected to drop by 5%

Harvested coffee cherries in a truck on a farm in Brazil. Photographer: Patricia Monteiro/Bloomberg
By Mumbi Gitau
June 09, 2023 | 09:47 AM

Bloomberg — Robusta coffee surged to the highest level since at least 2008, making it more expensive for buyers around the world to get a cheap brew.

Futures in London jumped to as much as $2,790 a ton, the highest since the contract started 15 years ago. Beans for September delivery traded at a premium of as high as $91 a ton to the November contract on ICE Futures Europe, the highest on record.

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The US Climate Prediction Center confirmed El Niño’s return, and forecasters believe it will be at least a moderate and possibly a strong one. The weather event usually brings hotter and drier conditions to main robusta growing regions including Vietnam and Indonesia threatening crucial supplies.

“There are very low stocks everywhere,” said Kona Haque, head of research at ED&F Man. With the Brazil coffee harvest underway, “the market is pushing prices to a level that will incentive Brazilians to export more conilon beans.”

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Prices have soared more than 50% since the start of the year as supplies of the beans — used in instant coffee and espressos — have failed to keep up with surging demand. A cost-of-living crisis has pushed consumers and roasters toward the variety over its more expensive arabica counterpart.

As roasters increase the amount of robusta in their coffee blends, growers struggle to keep pace. A combination of higher fertilizer costs and drought has slashed crop yields. That’s set to keep the global coffee market in a deficit for a third straight season in 2023-24.

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Vietnam, the world’s largest robusta grower, probably collected its smallest harvest in four years. The crop in Brazil, the No. 2 producer of the variety, is expected to drop by 5% while Indonesia’s output is projected to fall by 20% on adverse weather conditions.

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