Global coffee prices have reached their highest point in nearly five decades. The reasons are clear—poor weather in Brazil and Vietnam. These conditions have disrupted coffee production, leading to reduced supplies over the past three years. Consequently, benchmark prices at the ICE exchange hit $3.36 per pound.
The last time prices were this high was in 1977, when snow devastated Brazil’s plantations. Adjusted for inflation, that price would equate to $17.68 today. Although the situation is not as severe, consumers and traders alike are feeling the strain.
Brazil and Vietnam, the world’s largest coffee producers, are facing significant weather challenges. Brazil, producing nearly half of the world's arabica beans, has endured severe droughts. Even with October rains, soil moisture remains too low to support optimal flowering.
In Vietnam, excessive rains followed an earlier drought, disrupting robusta production. Experts predict Vietnam's crop may shrink by up to 10% by September 2025. Meanwhile, Brazil's arabica output is expected to drop by 10.5%, according to StoneX consultancy.
These factors have kept global coffee stocks low, unable to meet rising demand.
Traders are struggling with soaring hedging costs and delivery delays. Brazilian trading firms, such as Atlantica and Cafebras, are now seeking court-supervised debt restructuring.
Many traders who pre-bought coffee at lower prices face massive losses. To mitigate risks, they are closing out short futures positions, which further drives up market prices. Rising futures prices also increase margin calls, intensifying stress within the industry.
Roasters, including industry giants like Nestlé, are also under pressure. The company faced leadership changes due to weak sales caused by price hikes. Consumers have started switching to cheaper alternatives, forcing roasters to adapt quickly.
Coffee lovers worldwide are starting to feel the pinch. Prices for roast and ground blends are expected to rise within 6 to 12 months. However, consumers who purchase coffee from cafes may experience less impact.
For example, Starbucks benefits from a lower dependency on raw coffee costs. The global coffee price accounts for only 1.4% of a $5 cup of coffee. While home brewers may hunt for cheaper options, café-goers may continue enjoying their beverages without significant price changes.
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Discover why coffee prices are at a 50-year high due to weather issues in Brazil and Vietnam. Learn how it impacts traders and consumers.
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