The supply deficit of arabica coffee beans (something we first warned in March and later explained in May) is becoming more severe as certified warehouses of the premium coffee bean monitored by ICE Futures U.S. plunged.
Stockpiles of arabica coffee beans in ICE warehouses plunged 10% last week, the most significant drop since August 1998. Outflows from warehouses logged their 10th-straight weekly drop, a reflection of tight global supplies. Arabica coffee prices have more than doubled since we first mentioned the onset of the supply crunch.
Arabica coffee accounts for more than half of the world's coffee production has seen prices erupt this year amid adverse weather conditions in Brazil, the world's leading producer. Robusta coffee prices have also surged as international coffee companies have had no other choice but to source cheaper beans as arabica is in short supply.
International Coffee Organization, a London-based group that represents both producers and consumers, said, "weather-related shocks and potential disruptions in trade flows from stricter pandemic-related measures have become a serious threat to the regularity of coffee supplies."
This means for the U.S., the leading country in terms of coffee consumption, with upwards of 150 million Americans hooked on the delicious liquid stimulant, that a cup of coffee at home or in a retail setting, such as Starbucks, will become even more expensive. Also, factor in congested supply chains and soaring freight costs, and some Americans might switch from arabica to robusta to save money.