Supply shortages push coffee prices to record highs
Roasted coffee beans in the roasting plant at the Nestlé coffee capsule factory in Mecklenburg-Western Pomerania, Germany Sep. 24, 2024. (AFP Photo)
Arabica coffee prices soared to their highest level since 1977 during Nov. 27 trading, driven by concerns over limited supplies due to this year’s drought in Brazil.
A pound of Arabica beans listed in New York hit 320.10 U.S. cents, extending the commodity’s rally over the past year and pushing past a nearly thirty-year high the day prior.
The all-time recorded high was 337.50 U.S. cents in 1977.
Brazil, the world’s largest coffee producer, faced a record-breaking drought this year which has raised significant concerns about the production potential for the crop in 2025/2026.
The concerns come even after crops benefitted from “significant rains” that returned in October, leading to “excellent flowering,” according to Guilherme Morya, senior analyst at Rabobank.
Price rises have also been buoyed by geopolitical factors such as disruptions to shipping in the Red Sea, potential US tariffs, and the future European Union regulation on deforestation, according to analysts.
While demand remains high, “farmers are choosing to sell only what is necessary, thus limiting the coffee supply in the local market,” Morya added.
Vietnam has also faced supply concerns this year for its cheaper Robusta bean that’s used for instant coffee, as the country faced dryness during the growing period.
Robusta, listed in London, is trading at around $5,200 per tonne after reaching a record price of $5,829 in mid-September.
