Bad weather and supply chain issues are set to keep coffee prices elevated in 2022. Arabica coffee futures closed on Feb. 1 at $2.37 per pound, below January’s high of $2.47, the Wall Street Journal reported. During the same time last year, futures traded at $1.30. This was up 76% in 2021, the largest annual gain since 2010.
Consumers are now seeing higher prices as coffee sellers and roasters try to offset inflationary pressures. While Nestlé, one of the world’s biggest coffee brands, avoided raising prices for most of 2021, the company said in October that higher prices are expected this year.
“Cost inflation will be higher next year than it is this year,” said François-Xavier Roger, Nestlé’s chief financial officer at Barclays Global Consumer Staples Conference in September.
“We don’t know if this is going to be permanent. We don’t know if this will go even further into 2023. We will have a fairly pragmatic approach and anyway, you know what our strategy is, which is to offset anything that we receive, through pricing,” he continued.
J.M. Smucker Company has also felt the impact of bad weather and supply chain disruptions, The Journal noted and raised prices in response.
Coffee shops started to raise prices as well, The Journal reported. Kafe Kerouac, a coffee shop in Columbus, Ohio, raised prices for all lattes and espresso drinks by 25 cents this year. Café Du Monde in New Orleans raised prices in November by an average of 5% to help offset the price of coffee beans and cans.
Prices could come down if the weather improves, but traders are looking at the health of this year’s coffee crop.
“We are not as comfortable with the coming crop as we were a year ago,” said Thiago Cazarini, coffee broker at Cazarini Trading Co. Mr. Cazarini estimates that coffee will trade between $2.60 and $2.80 a pound for the first half of 2022, The Journal added. “We haven’t seen the highs in coffee yet.“
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