Arabica coffee futures on the New York Stock Exchange rose 4.9% to $3,446 a pound, the highest since 1972.
Points of attention
- The record rise in global coffee prices is attributed to prolonged drought in Brazil and adverse weather conditions in Vietnam, leading to concerns about shortages and price impacts.
- Analysts predict a record shortage of coffee in the market in the upcoming seasons, with Brazil and Vietnam projected to fall short of meeting the demand, causing significant deficits.
- Rising coffee prices may result in cost increases for roasters and cafes, ultimately affecting consumers through potential price adjustments.
- Forecasts indicate that Brazil's Arabica crop production is expected to decline significantly, leading to another supply shortfall and exacerbating the global coffee market's challenges.
- The concerns surrounding Brazil's coffee production highlight the critical nature of the situation, emphasizing the need for strategic measures to address the potential future shortages and price fluctuations.
What is known about the record rise in global coffee prices
According to the journalists of the publication, since the beginning of the year, Arabica prices have generally increased by 80%.
The situation is said to be complicated by a prolonged drought in Brazil, which remains the world's largest producer of Arabica.
In addition, unfavorable weather conditions in Vietnam, where the world's largest amount of robusta coffee is grown, affected the growth of coffee prices.
In Vietnam, coffee crops in particular were hit first by prolonged drought during growth and then by heavy rains during harvest.
Analysts also downgraded forecasts for Brazil's Arabica crop.
What forecasts do analysts make regarding the future harvest and production of coffee
In particular, in the next season, Brazil is expected to produce only 34.4 million bags of Arabica, which is about 11 million less than according to forecasts made in September of this year.
Thus, world coffee production will not reach the current demand level of 8.5 million bags in the 2025-2026 season, which will prove a record deficit over the past 5 years.
Concerns about Brazil's 2025-26 Arabica crop grew this week. Recent crop surveys indicate production in the range of 30 million bags, which will lead to another supply shortfall, explains Marex Group analyst Steve Pollard.
Rising prices could lead to further cost increases for roasters and cafes, which will be forced to raise prices and give up discounts.
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