If the price increases of many agricultural goods were not enough, now it also turns out that coffee prices are soaring as a result of the weather. This is according to a review published today by ARK TRADE, which develops a digital platform for trading goods, based on artificial intelligence. The review shows that in the last month alone, the price of the popular Arabica coffee beans jumped by about 12%, thus completing an increase of about 25% in about a year from a level of $1.9 per pound (about half a kilo) in September 2021 to a level of $2.39 per pound as of the end of August 2022. Will the price of the espresso we drink in the morning soon be more bitter?
Arabica crops are sensitive to cold. In the past year, Brazil suffered from the effects of intense cold and at the same time a severe drought, which severely damaged the extent of coffee crops in the country. Some associate this with the “La Niña” phenomenon, according to which cooling in the Pacific Ocean causes extreme phenomena in various countries, including drought in Brazil and other countries. According to Orit Shipman, founder and CEO of ARK TRADE, it seems that the consequences of the climatic phenomena on coffee prices in the near term are expected to be high. ) and the ‘weather’ on future coffee prices are very high – 25.4% and 14.2% respectively. In my estimation, as long as these phenomena continue, coffee prices may continue to rise,” says Shipman.
On the other hand, last year there was actually a decrease in cocoa prices. As of the end of August, a ton of cocoa traded at a price of $2,413. A decrease of about 11% compared to the same period last year. However, from the analysis of the company’s artificial intelligence system, it appears that the price of cocoa is also very sensitive to the consequences of the parameter ‘global crises’ and ‘weather’, and it is not only affected by the normal course of business of supply and demand. The artificial intelligence analysis shows that the influence of the parameters ‘global crises’ and ‘weather’ on the price of cocoa in the near term is 35% and 27% respectively. This effect was already manifested in the last month, during which there was an increase of about 3.5% in cocoa prices.
Shipman explains that in the context of cocoa prices, the ‘global crises’ parameter mainly relates to the consequences of the war in Ukraine and the climate crisis that affects various crops all over the world. “Russia is one of the largest exporters of fertilizers in the world,” explains Shipman. “Apparently, due to the sanctions, there is a global shortage of fertilizers and their price has increased, which also affects and harms the scope of cocoa crops and their quality. Added to this is the drought in some African countries. For example, Ghana, which is one of the largest cocoa exporters in the world, reported that the scope of its cocoa crops has decreased by half The first of 2022 by about 35% compared to the corresponding period last year. This is due to the lack of fertilizers and the drought.”
However, the company estimates that there seems to be no shortage of cocoa and this is, apparently, the main reason why prices remain relatively stable.
The company explains that Ghana and the Ivory Coast together own about 60% of the global cocoa cultivation and export, with the Ivory Coast’s share 3 times larger than Ghana’s. Ghana recently announced that it expects a recovery and an increase of about 30% in the volume of the crop in the coming year. At the same time, the Ivory Coast, which was almost unscathed. actually reported an increase in the volume of produce in the past year.
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