The price of arabica coffee beans jumped 5.44% on June 16 amid reports that the annual harvest in Brazil is being delayed by heavy rainfall.
Coffee prices are now at their highest level in five weeks due to concerns that persistent rain in Brazil will delay the coffee harvest by weeks or even months.
The price spike comes as coffee inventories have trended lower over the past three months. Inventories of arabica coffee beans have fallen to a six-month low.
At the same time, robusta coffee bean inventories are currently sitting at a two-year low, pushing prices higher as a result.
An El Niño weather pattern is bringing heavy rains to Brazil’s coffee region, hurting that country’s crop and efforts to harvest it.
The jump in coffee prices reverses a downward trend in recent months. Only a week ago, arabica coffee prices fell to a 19-month low amid expectations for a bumper crop this year.
Soaring coffee exports from Vietnam, the world’s largest robusta bean producer, helped push prices lower in recent months.
But the situation in Brazil now has coffee prices trending higher.
Inventories of coffee beans have been depleted in many regions as the closure of the Strait of Hormuz near Iran disrupted global coffee shipments and supplies.
The rise in coffee bean prices is likely to be passed onto consumers and could impact sales at retail coffee outlets such as Starbucks (NASDAQ: $SBUX) and Dutch Bros. (NYSE: $BROS).
