(Bloomberg) -- The world’s cheapest coffee variety is facing such enormous shortages that its beans are already more expensive than the fancy type favored by Starbucks Corp., at least in top grower Brazil.
Robusta beans, used to make instant coffee and the bitter espressos popular at Brazil’s bars and bakeries, are now trading at a premium to the mild and usually more expensive arabica variety. That’s the case even for the super high-quality fine beans the country usually exports to roasters in the US and Europe.
The unusual reversal in prices comes after dry weather hurt crops in Vietnam, the largest producer of robusta coffee, plunging the world into a fourth year of shortages. It also highlights how coffee markets have been transformed by both extreme weather events and increased demand for instant coffee since the pandemic.
“Robusta is competing in terms of demand with some of the beans typically considered of superior quality,” said Fernando Maximiliano, an analyst at StoneX in Brazil, the largest producer of the arabica variety.
Consumers are drinking more and more robusta, with global soluble coffee consumption on track to hit a record high this year. Other robusta-heavy products like bottled ready-to-drink coffee are also on the rise. Brazil, which ranks second in robusta production, is also shipping record amounts of the variety overseas to make up for the shortfall from Vietnam.
Read: Instant Coffee Mania Fuels Global Rise of Robusta Beans
The price of robusta coffee in Brazil’s top producing state of Espirito Santo hit a record last week, according to the University of Sao Paulo. Those beans have now traded higher than arabica for several days, something that last happened in 2015, researchers led by Margarete Boteon said.
Robusta even traded at higher prices than some of the best arabica beans, the so-called fine cups, data from brokerage Flavour Coffee showed. Some bags of robusta coffee were last week offered at a premium of as much as 80 reais ($15) a bag to beans of fine cup quality.
Futures Market
To be sure, such price reversal is unlikely to happen in the futures market, where arabica beans traded in New York are still more expensive than robusta coffee in London. That’s because of the high quality specification of the beans accepted by the New York exchange compared to most of the arabica coffee produced in Brazil.
Arabica futures are also surging, having climbed to the highest in 13 years earlier on Monday.
Pricey robusta is leaving consumers already having to spend more on a morning latte with few options. It’s also a big change for an industry that up until recently saw the variety as less desirable.
The type of robusta grown in Brazil, known as conilon, has long been restricted to a small portion of the country’s domestic market. But recent investments in crop treatment and farming techniques have helped improve quality, said broker Nelson Carvalhaes.
“There used to be a lot of doubts about the quality of robusta, but the improvement in the product is significant and the market understood that,” he said.
--With assistance from Mumbi Gitau and Isis Almeida.
(Updates with arabica futures in ninth paragraph. A previous version of this story corrected Starbucks name in first paragraph.)
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