8 months ago • 2 mins
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What’s going on here?
Robusta coffee bean prices have hit record highs, making for serious lows for those who struggle without their morning brew.
What does this mean?
Your cup of joe is probably made from one of two bean varieties: arabica or robusta. And it looks like your routine is about to cost a little more either way. Robusta beans hit record highs over the past week, while arabica reached levels not seen for over a decade. See, bad weather in Brazil and Vietnam – two of the world’s biggest coffee producers – has ruined crops and pushed down production. At the same time, buyers are clamoring for both beans: arabica because it’s sweeter and makes for better blends, and robusta because it’s used in increasingly popular instant coffee. That’s squeezing prices higher, leaving night owls facing a tough choice between tight budgets and – shudder – cold showers.
Why should I care?
For you: Bitter pill to swallow.
Inflation might be falling, but even cheaper cups of coffee look set to get more expensive. Big brands like Starbucks and McDonald’s – the go-to coffee houses for millions – use 100% arabica beans. And staying home might not help much either: Nespresso uses 90% to 95% arabica, with a little robusta too. Plus, if major names start cutting costs by substituting sweet arabica beans with a cheaper alternative, you might be left with a bitter taste in your mouth – literally.
Zooming out: Not even an espresso martini will take this edge off.
It’s been a rough year for mocha drinkers and tiramisu eaters. Cocoa prices have more than doubled this year, with crops wiped out by extreme weather. Although, while cocoa and coffee might be staples in investors’ pantries, they’re not a typical commodity in their portfolios. For most investors, gold’s the real pick-me-up when it comes to diversifying away from stocks and bonds.
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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.