Coffee Hits Highest Price in Nearly 50 Years

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

The 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 about $3.28 per pound on Nov. 27 at the Intercontinental Exchange, surpassing the previous high of more than $3.11 set in 1977. The price closed at just above $3.23 per pound on Nov. 29. Similar to 1977, when there was a coffee production crisis in Brazil, the largest supplier of arabica beans, that country is currently struggling to fully recover from this year’s drought, resulting in worries about next year’s crop.

Arabica makes up about 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,” a report by Atlantica Coffee, one of the largest coffee exporters in the South American country, states.

“Weather conditions in Brazil and Vietnam continue to be closely monitored.”

Vietnam is a key producer of robusta.

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

More than 1.7 million bags of coffee were not shipped by October because of issues including changes in shipping schedules, according to the second report. The lost volume is equivalent to more than 5,200 shipping containers.

Arabica coffee prices have risen by about 70 percent this year. This makes arabica 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 Nov. 27 that they will negotiate with their creditors in court, noting that 900,000 60-kilogram (about 132-pound) 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 12-month period from July 2024 to June 2025 compared with the preceding 12-month period.

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 stated.

“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, which 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. However, opposition from companies in nations such as Brazil and Indonesia resulted in a one-year delay in implementing the regulation, according to 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 group International Coffee Partners welcomed the EU decision to extend the implementation of the deforestation rule.

“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 stated.

Small-scale farmers account for up to 80 percent of global coffee production, according to the group.

“Smallholder coffee farmers face mounting climate, market, and compliance challenges,” it said. “Critical support is necessary.”

Reuters contributed to this report.