AYESHA RASCOE, HOST:
We don't want to alarm you coffee drinkers on this fine morning, but the price of coffee on the futures market broke a nearly 50-year record last week. Of course, there's a lot of concern for what this means for the prices we'll see at coffee shops and supermarkets. So we invited NPR's Alina Selyukh here to explain what's going on. Welcome.
ALINA SELYUKH, BYLINE: Hello, hello. Can you guess what I brought?
RASCOE: Did you bring some coffee to keep you going?
(SOUNDBITE OF COFFEE POURING)
SELYUKH: Brought my latte.
RASCOE: (Laughter) OK. You brought your latte. What is happening with coffee prices?
SELYUKH: Coffee prices have soared, and it all started with problems with harvests, first in Vietnam and then in Brazil. These are the two top growers of the most common types of coffee beans. And the culprit was abnormal weather, which many in the industry attribute to climate change. I talked to some longtime importers of green coffee. That's raw beans. One of them is John Cossette from Royal Coffee in California.
And he says, first, you had Vietnam with a serious drought followed by heavier rains than usual, and that drove up prices for the bean that grows there and already had people scrambling to switch to the bean that grows in Brazil. And then Brazil had one of the worst droughts on record. Here's Cossette.
JOHN COSSETTE: Once they started harvesting the coffee - it's kind of nice to have dry weather when you're harvesting, but as soon as it's done, you want it to start raining, you know, because soil will moisture up and initiate flowering. And it just didn't happen. It really freaked people out.
SELYUKH: Eventually, it did rain, but farmers later said a lot of the damage was irreversible. And so the price of the most common coffee - that's called arabica - jumped 70% this year. The price of the other type of coffee, called robusta, at one point doubled in price. Both cost more than they ever did.
RASCOE: Arabica and robusta - how different are these?
SELYUKH: Yeah. So they have different flavor based on where they grow. What I have here in my cup is arabica. It is the most common. Brazil is the biggest grower, and this coffee grows at higher altitudes. It has a softer, sweeter taste, and that's what you find often in your roast coffee, your ground coffee. Robusta grows at lower elevation. Vietnam is the biggest grower, and this bean has a harsher, more bitter taste. It's used a lot for instant coffee.
RASCOE: OK. I think my mom drinks something like that. But back to the prices.
SELYUKH: OK.
RASCOE: Was it just the irreversible damage to harvests that drove up the cost?
SELYUKH: You know, coffee markets are complicated, like all commodities. Many of the traders actually need the physical coffee, the bags of beans, but many traders are just financial speculators. They're trying to game the price change, you know, buy cheaper, sell higher. And everyone bets on how much they think beans will cost in the future. And so when people think those beans won't grow or there won't be enough, those who need those beans scramble, speculators go nuts and it all only spirals the price further, which is what's happened. And it doesn't help that this week, one of the world's biggest coffee traders made a forecast that arabica, coffee like I have here, could see supply decline by nearly a quarter in the next cycle.
RASCOE: We've been talking about record prices on the futures market, but I don't buy coffee at the futures market, right? You buy it at the grocery store or at Starbucks. So how is this going to translate?
SELYUKH: So I'm sorry to say those prices have already been rising. If you shop at the supermarket - brands like Nescafe, Maxwell House, Folgers, Dunkin' - they've all had waves of price increases. They've cited higher cost of the green raw coffee. At your local coffee shop, it really depends, depends on how they source their products, but yes, likely they're feeling the pressure to raise prices, and they're just trying to assess how to do that without scaring away shoppers.
But fact of the matter is, as a world, we are drinking more and more and more coffee. So demand has not waned so far. People so far have been willing to pay those higher prices for their coffee habit. The markets will probably eventually calm down. Importers I talked to pointed out, historically, adjusted for inflation, we've actually been paying pretty low prices for a pound of coffee. So maybe it's the days of cheap coffee that are over.
RASCOE: That's probably bad news (laughter) for coffee drinkers, but we got to give it to you straight. No cream and sugar here. That's NPR's Alina Selyukh. Thank you so much.
SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.
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