Coffee Hits Highest Price in Nearly 50 Years

A worker picks coffee berries from a Robusta coffee (Coffea canephora) shrub in an estate on January 29, 2024 in Hanbal village, Hassan district, in the southern state of Karnataka, India. Photo by Abhishek Chinnappa/Getty Images

Coffee price in the commodities market has reached an almost five-decade high following concerns of adverse conditions impacting crop output and ongoing supply chain issues.

Coffee futures were trading at around $3.28 per pound on Wednesday at the Intercontinental Exchange, surpassing the previous high of over $3.11 set back in 1977. It closed at just above $3.23 per pound on Friday. Similar to 1977, when there was a coffee production crisis in Brazil, the largest supplier of arabica coffee, the country is currently struggling to fully recover from this year’s drought, resulting in worries about next year’s crop.

Arabica makes up around three-quarters of global coffee production. The remaining 25 percent is accounted for by the robusta crop. The Intercontinental Exchange is a benchmark for Arabica coffee.

“Soil conditions still show a water deficit due to a prolonged lack of rainfall, leading to revised crop forecasts,” according to a report by Atlantica Coffee, one of the largest coffee exporters in the South American country.

“Weather conditions in Brazil and Vietnam continue to be closely monitored,” it said. Vietnam is a key producer of robusta.

According to the Brazilian Coffee Exporters Council, exporters in the country are facing logistical challenges in shipping the produce, Atlantica said in another report.

More than 1.7 million coffee bags were not shipped by October because of issues including changes in ship schedules, it noted. The lost volume is equivalent to more than 5,200 containers.

Arabica coffee prices have risen by around 70 percent this year. This makes it one of the strongest performing commodities alongside cocoa, for which prices have more than doubled.

Dealers also said some Brazilian farmers have delayed deliveries of this year’s crop in the hope of securing even higher prices, leading to short-term supply tightness and large financial losses for traders who had been expecting to receive the coffee.

Brazilian coffee traders Atlantica and Cafebras said on Wednesday that they will negotiate with their creditors in court, noting that 900,000 60-kilogram bags of coffee promised by farmers have not been received.

Brazil Production, EU Laws

According to a recent report from the U.S. Department of Agriculture, Brazil will see only a marginal 0.2 percent growth in coffee production for the marketing year 2024/25 compared to the previous year.

Initially, production forecasts for 2024 were positive, with key coffee-producing regions in the country experiencing good weather. However, higher temperatures, irregular rainfall, and drought have led to a 6 percent cut in forecasts.

“There is currently reduced global supply of robusta mainly from Vietnam. The monthly price average of robusta in Brazil surpassed arabica values in September, leading to record exports of Brazilian coffee and giving a new boost to producers,” the report said.

“However, the lack of rain throughout 2024 is already impacting arabica and robusta crops, which could compromise the production of the 2025/26 harvest.”

Between June and September, some parts of Brazil experienced 130 straight days without rainfall. The quality of initial harvests was deemed to be below expectations.

Meanwhile, the coffee market is also facing another challenge—the EU Deforestation Regulation. It requires businesses importing products such as coffee, rubber, and wood to ensure that these products are not cultivated on deforested land.

The rule was set to come into effect in December this year. However, opposition from companies in nations like Brazil and Indonesia resulted in a one-year delay in implementing the regulation, said a Nov. 14 report from S&P Global.

The regulation will now come into effect on Dec. 30, 2025, for large companies and on June 30, 2026, for micro- and small enterprises.

Nonprofit advocacy International Coffee Partners welcomed the EU decision to extend the deforestation rule implementation.

“The timeline extension provides much-needed breathing space for smallholder farmers who face significant challenges in complying with the stringent geodata and traceability requirements set forth by the regulation,” it said.

Small-scale farmers account for up to 80 percent of global coffee production, the group claimed. “Smallholder coffee farmers face mounting climate, market, and compliance challenges,” it said. “Critical support is necessary.”

Reuters contributed to this report.