Robusta Coffee Prices Have Reached An All-Time High

The pressures of inflation may have finally started easing this year, but some products like Robusta coffee have still seen prices surging to all-time highs. Robusta coffee is one of the two commercially produced coffee varieties, along with the more familiar Arabica and makes up about 40% of coffee production around the world. 

The price jump comes as a bit of shock, as Robusta is normally the cheaper of the two and is generally used in low-end applications like instant coffee. While it originated in Africa, most production of Robusta is in Southeast Asia and Brazil, and the weather in those two regions are responsible for this rise in prices.

The price of Robusta peaked at an all-time high of $2,785 per metric ton today, driven by ongoing drought-related shortages in Brazil and forecasts that put a high probability of major producers Indonesia and Vietnam experiencing El Niño this year (via The Wall Street Journal). Brazil and other parts of South America have been locked in a relentless drought mix of high temperatures and low rainfall that has caused huge drops in agricultural output in the world's largest producer of coffee. 

Now the El Niño forecast threatens to make the coffee output problem even worse, as the increasing water temperatures associated with the phenomenon can cause drought and flooding, damaging crops in one of the world's other major coffee regions.

While El Niño's effects are uncertain, the odds of a strong El Niño are above 50%, per Emily Becker of the El Niño-Southern Oscillation (ENSO) team. Prices of Robusta coffee had already jumped 50% from the beginning of the year because of Brazil's drought issues, and El Niño normally causes the same problems in Southeast Asia. This strong change in weather is predicted to cause up to a 20% fall in Robusta production in Indonesia and has already affected Brazil, which saw a 40% drop in production during the last wave of El Niño in 2015 and 2016, according to Reuters.

The price of Robusta has also been pushed up due to high demand, ironically stemming from its low price compared to Arabica. Worldwide cost of living issues have driven consumers to lower price coffee options, pushing producers to increase the amount of Robusta used in coffee blends. Robusta is also easier to grow and more resilient to climate change than Arabica, which has spurred countries like Vietnam to plant more of it in hopes of a more stable supply. Now this jump in Robusta demand has hit a world of extreme weather head on and given us a possible preview of things to come.