The weather phenomenon El Niño, which risks triggering tropical cyclones in the Pacific Ocean, heavy rainfall in South America and drought in Australia, is on its way.
In particular, the harvest of the Robusta bean may be challenged in countries such as Vietnam and Indonesia.
The expected poor harvest of the bean may in particular affect the price of instant coffee and espresso, where Robusta is most often used.
It is not unusual for Vietnam and Indonesia to experience a drop of up to 20% in production during El Niño years. This is according to Shawn Hackett, president of commodity brokerage Hackett Financial Advisors.
Robusta beans account for 40% of the world’s coffee production. Arabica beans make up the remaining 60% of global coffee production.
Especially in Asia, people have experienced an increasing taste for the more bitter Robusta bean.
“Asia has generally loved Robusta more than Arabica, and therefore the demand for Robusta is growing much faster,” explains Shawn Hackett.