High-end blends not immune to coffee crisis
Some investors are hoping for a rebound in prices soon, but most are gearing up for a prolonged rout
Chicago — The dramatic plunge in coffee prices has gotten so bad that it’s threatening to claim its next victim: the specialty blends used by fancy coffee shops and discerning home brewers. On the futures market, arabica coffee — the smoother variety favored by companies like Starbucks — is languishing near a 13-year low. Growers in Brazil, the world’s biggest exporter and producer, have expanded output and become more efficient, collecting more beans for every planted acre. The result is a huge glut that’s sent prices below break-even in many countries, sparking fear producers will leave the industry. Some of the hardest hit farmers are in Central America, home to specialty varieties like the Geisha beans grown in parts of Costa Rica. There’s a double whammy when futures prices fall. Since many specialty producers plant fields with beans deliverable against arabica-futures contracts, along with premium beans, it cuts into overall profits. The broad downturn for the market at a time...
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