Coffee Set to Get Cheaper in 2014

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2014 is going to be a big year for coffee, and we’re not sure it’ll be a positive thing. A continuing oversupply of coffee around the world means that prices are continuing to drop; The Wall Street Journal reported recently that coffee prices fell 20% in 2013, which is down 49% since 2011.

Coffee production in Brazil, where yields are predicted to grow higher still in 2014, will potentially cause coffee prices to drop even lower. This photo by Sarah Allen shows a large mill in the Minas Gerais state of Brazil.

Coffee production in Brazil, where yields are predicted to grow higher still in 2014, will potentially cause coffee prices to drop even lower. This photo by Sarah Allen shows a large mill in the Minas Gerais state of Brazil.

You might be thinking this year’s low prices are a result of the coffee-leaf rust epidemic in South and Central America, but that’s not the case. The U.S. Department of Agriculture reports that decline from those areas will be compensated for by coffee production in Africa and Asia. The problem is stockpiles of coffee, and it’s worst in Brazil and Vietnam, says the USDA. Sounds as though demand from consuming countries is pretty stagnant, while coffee production continues to swell.

“I don’t think we’ve seen the absolute low for prices,” sterling Smith, a futures specialist at Citigroup, told the Wall Street Journal. “There is a strong possibility that we will see record production in a new crop of coffee.”

 

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