Though stock prices for arabica coffee fell on Wednesday to their lowest levels since 2009, don’t expect inexpensive coffee for long. As growers cut back, investors are jumping on this opportunity, placing bets on low coffee stocks.
According to the Wall Street Journal, coffee growers are taking a hit from the low prices of coffee. Coffee-bean prices have fallen 54 percent in the past two years, and coffee farmers are struggling to earn substantial wages. “It is impossible to go on,” said Joaquim Libânio Ferreira Leite, a Brazilian coffee farmer said to the WSJ. “No money, no coffee.”
Some farmers are even reconsidering the use of their land, a move that investors are relying on to make beans more rare, increasing the value of their coffee stocks. With production low, stock cost decreases. But come harvesting time, investors are expecting a big value increase for their once inexpensive stocks.
The governments of big coffee-growing countries, like Brazil, are trying to help farmers through direct subsidies and free farming supplies, which could ultimately smooth out price volatility. But in the meantime, coffee farmers will have to hold on tight and hope they can ride out the economic chaos.