reply Global Coffee Bean Prices Hit Near 50-Year Highs

Global prices for coffee beans have soared to the highest level in nearly 50 years due to bad weather in Brazil and Vietnam, forcing roasters such as Nestle to raise prices and consumers to look for cheaper coffee amid a cost-of-living crisis, Reuters reported on December 4th.　　Soaring prices will benefit farmers who grew the beans this year, but pose a challenge to traders, who face high hedging costs and are competing for the beans they pre-purchased.　　Yield issues related to bad weather in Brazil and Vietnam have led to an oversupply of coffee beans globally for three years. That has led to depleted stocks and pushed the benchmark Intercontinental Exchange trading price to a peak of $3.36 per pound (about 0.45 kilograms).　　According to the data, the last time coffee prices were this high was in 1977, when heavy snowfall destroyed large swaths of Brazilian plantations. However, the impact on consumers was much greater then. When inflation is taken into account, $3.36 per pound in 1977 is equivalent to $17.68 today.　　Experts predict that coffee bean production will remain low this year.　　Brazil produces nearly half of the world's Arabica beans (the high-end variety used mainly in coffee shops), and the country has suffered one of the worst droughts on record this year.　　Although it finally started raining in October, soil moisture remains low. Experts say the trees are growing too many leaves and too few flowers that will bear fruit.　　About 40 percent of the world's Robusta coffee beans, which are typically used to make instant coffee, are produced in Vietnam. The country experienced a severe drought earlier this year and has had too much rainfall since October.　　Consulting firm Stonex believes that production of Brazilian Arabica beans will fall by 10.5% to 40 million bags next year, which will offset the higher production of Robusta beans, reducing the country's total coffee bean output by 0.5%.　　In Vietnam, production will be cut by 10% in the year to the end of September 2025, exacerbating the global supply shortage of Robusta coffee beans.　　Brazil-based traders Atlantica and Cafebras are seeking a court-supervised debt restructuring due to soaring coffee bean prices, high hedging costs and delivery delays.　　If negotiations are unsuccessful, they are headed for bankruptcy.　　Traders who buy coffee beans from Atlantica and Cafebras typically take short positions in the futures market to hedge their exposure to the spot market.　　Fearing that they will not be able to buy physical coffee beans from Atlantica and Cafebras, many traders are closing out their short futures positions at a loss.