The price of Arabica %Coffee beans has hit an all-time high above $4 U.S. per pound as concerns over global supplies continue to drive a rally in the agriculture commodity.
Arabica coffee bean prices have now doubled over the past year. Commodities analysts and traders see more increases ahead as worries grow about the available supply.
Specifically, fears have gripped markets about the future output of coffee beans in top producer Brazil after a prolonged drought in that country.
A shortage has led local farmers in Brazil to sell most of their Arabica coffee bean crop this year, leaving questions over how much will be left to ship in coming months.
The rise in prices is filtering down to consumers who are paying increasingly high prices for coffee brewed at retail outlets such as %Starbucks (NASDAQ: $SBUX) and %TimHortons (TSX: $QSR).
Analysts say they are already seeing a decline in coffee consumption amid emerging economies, and that is likely to also occur in wealthier nations moving forward.
At the same time, commodities traders have been ramping up their bullish bets on Arabica coffee in recent days on the assumption that prices will continue trending higher.
Beyond Brazil, there are also worries about the coffee crop in Vietnam, the largest producer of the cheaper Robusta bean, after fields were hit by unfavorable weather.
The U.S. Department of Agriculture recently forecast that global stockpiles of coffee beans, both Arabica and Robusta, are likely to fall to a 25-year low this year.
Arabica coffee beans are currently trading in New York at $3.98 U.S. per pound, having pulled back slightly after rising above $4 U.S. a pound for the very first time.
