Your Morning Coffee Fix Just Got More Expensive — Here’s Why

Pouring coffee with smoke on a cup and coffee beans on burlap sack on black background.
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Brazilian farmers announced Wednesday that an unusual drop in temperatures to freezing levels irreparably damaged coffee crops and hurt prospects for next year’s crop. In response to the news, Reuters reported that coffee prices jumped nearly 13%, a 6 ½ year high.

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The New York futures price for arabica rose above $2 a pound, a level not seen since October 2014, according to Financial Times. Java lovers will notice a higher price tag as coffee houses and supermarkets are already starting to increase prices.

The frost hit Minas Gerais and Sao Paulo on the morning of July 20 and according to Brazil’s National Meteorology Institute, the minimum temperature in Minas Gerais, Brazil’s major coffee-producing region, dipped to 29 degrees Fahrenheit, as reported by Reuters.

Farmers expect to need to replant trees, according to Nasdaq, because coffee plants are sensitive to frost. This kind of severe frost can kill the plant completely.

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“I will probably have to take out some 80,000 trees, they are burned all the way to the bottom,” said Airton Gonçalves, who farms 100 hectares (247.11 acres) of coffee in Patrocinio, in the Cerrado region of Minas Gerais, as noted by Reuters. Gonçalves estimates his 2022 coffee production will fall to around 1,500 bags from the usual 5,500 bags.

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Trade houses are attempting to assess damages, according to a source at a global agricultural commodities trader and as reported by Nasdaq, with current loss estimates ranging from 1 to 2 million bags for next season.

“I think the figures are going to be close to double (that),” the source said.

Brazil is the world’s largest coffee producer, accounting for one-third of all the coffee produced worldwide, due to its optimal climate for the production of coffee beans.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

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