London (AFP) – The price of Arabica coffee hit the highest level since 1977 on Wednesday, approaching a record high as drought in top producer Brazil this year hits supplies. A pound (453.6 grams) of Arabica beans listed in New York struck 320.10 US cents, extending the commodity’s rally over 2024. The all-time high is 337.50 US cents, seen in 1977.
Brazil, the world’s largest coffee producer, faced a record-breaking drought this year which has raised significant concerns for 2025/2026 crops amid already tight supplies. This is despite “significant rains” in October, leading to an “excellent flowering,” according to Guilherme Morya, senior analyst at Rabobank. He added that farmers were selling less than was needed to meet demand.
Analysts said that price support came also from geopolitical factors such as disruptions to shipping in the Red Sea, potential US tariffs, and future European Union regulation on deforestation. “It is clearer and clearer that this (supply situation) is going to have a significant impact on the consumer,” John Plassard, senior asset specialist at Mirabaud group, told AFP.
Companies are preparing to negotiate their coffee contracts early next year, with food giants like Nestle set to pass on price increases to customers. The Swiss group announced this month that it would increase prices and reduce the size of its coffee bags to protect margins.
In London, some coffee drinkers approached by AFP on Wednesday vowed to keep on buying their beans, but owing to recent price hikes added that they had already begun to buy fewer cups in cafes. “I’ve noticed that the prices have gone up,” said Julie, 34, as she held a cup of coffee not long purchased from a coffee shop. “I prefer to buy packs and brew it at home. It’s rare for me to buy it in the shop, but it used to be more frequent.”
Nicky, 26, said she was not ready to give up purchasing cups of coffee in stores. “I would still pay for it. Maybe that’s me being financially reckless.” She described coffee drinking as “a lifestyle, it’s how people start their day.”
Vietnam has also faced supply concerns this year for its cheaper Robusta bean that is 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.
© 2024 AFP
