Every morning, Ulf Lindvall checks the weather forecasts for several regions in Brazil.
As the CEO of the family business Lindvalls Kaffe, founded as far back as 1891, the Brazilian weather has enormous significance for his operations and ultimately for the coffee consumer as well.
Now it looks like it's going to get dry in Brazil, which is not good at all. It has to start raining in March-April too. If it doesn't, it won't be fun at all, he says bluntly.
Leading Producer
Brazil has been the world's leading producer of coffee beans for over a century, and it's highly likely that some of the cups of coffee you drink have their origin in one of the country's many coffee plantations. It's also why the weather development in the country is so crucial for the global market price of coffee beans.
If the rain comes back, Brazil will have a decimated harvest, but still a harvest. It will keep the market relatively calm at these price levels. If it stays dry, I don't know what will happen. Then it could explode even more upwards, says Ulf Lindvall.
The fact that a packet of coffee can now cost up to 70-80 kronor in the store is linked to the price development of Arabica beans on the raw materials exchange in New York. From a level of around 170 dollars per pound in May 2024, the price has skyrocketed and was at almost 450 dollars at the beginning of February this year. The background to this is the drought and fires in Brazil that negatively affected the harvest.
Another challenge for Swedish actors like Lindvalls is the high dollar exchange rate, even though it has weakened slightly against the krona in recent times.
We have costs in dollars but revenues in Swedish kronor, and it hasn't been fun for a while. The krona strengthening at least dampens our problems a bit, but compared to the enormous price increase (of coffee beans), the krona strengthening is almost negligible, says Ulf Lindvall.
Underlying Causes
Regardless of how the coming weeks and harvest develop, Ulf Lindvall points to a broader perspective. The underlying causes mean that such prices in the future may become the norm:
It's weather phenomena that cause this, and if it's climate change that's causing this extreme weather, there's nothing that says it will get better in the future. I'm worried that we'll get used to coffee prices being at these levels.
The futures price of coffee beans has skyrocketed over the past year and reached levels not seen since the 1970s.
The background is primarily unfavorable weather conditions, including the worst drought that has ever hit Brazil, when it practically didn't rain at all from spring 2024 to autumn.
On the coffee market, there are two types of coffee beans, Arabica and Robusta, where Arabica is traditionally the more expensive option and is also considered to be somewhat "finer". Robusta contains more caffeine and is used, for example, for espresso.
Brazil is the world's largest producer of Arabica, while Vietnam is the market leader when it comes to Robusta.
