Brazil drought puts froth on coffee prices

LONDON, Mar 16 (AFP): The morning caffeine hit is about to get more pricey as drought in top producer Brazil has sparked fears of a global shortfall of coffee this year, sending the price of beans soaring.

Coffee prices hit their highest point in two years in New York, with Arabica beans due for delivery in May fetching 203.75 cents per pound, more than double that of the 100.95 cents per pound in November.

The worst drought to hit Brazil in decades has sparked fears that the crop in the world's top coffee producer could shrink for the second consecutive year for the first time since 1970.  Leandro Gomes Ribeiro Costa, head of coffee at farmer group Coopamig, said some regions of Brazil have had only a tenth of their average rainfall so far this year during a crucial stage in the beans' development.

Coopamig, which is made up of 5,800 farmers from the country's main coffee producing region Minas Gerais, expects to harvest up to 30 per cent less coffee this year than in 2013. "I've never seen such a drought in my life: in some places we have found coffee wilted on the tree," he told AFP.

The price of robusta, the more bitter variety of bean used in instant coffee, has also surged due to cold and drought in Vietnam. On Friday, London prices hit $2,176 a tonne, up from $2,076 at the same time last week. The International Coffee Organization (ICO) now forecasts a global production deficit of at least 2 million 60 kilogram bags of coffee in 2014-15.