Coffee futures have been rising throughout the year, reaching 47-year highs in response to mounting global supply constraints caused by adverse climate conditions.
Coffee prices have increased by $140.49 per pound, amounting to 74.61%, since the start of the year, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Earlier this week, Arabica coffee futures surpassed $3.20 per pound, their highest level on a closing basis since at least 1972.
Historically, coffee reached an all-time high of $339.86 in April of 1977. As of Thursday morning (9:28 GST), the price of the commodity stood at $328.98 per pound.
Arabica coffee marks the world benchmark for coffee futures contracts that trade on the Inter Continental Exchange (ICE), as it accounts for 75% of the world’s coffee production. This variety is cultivated in Brazil (40% of the world’s total supply) and Colombia.
Meanwhile, robusta coffee accounts for the remaining 25% and is mostly produced in Vietnam (15% of global supply) and Indonesia. Other major exporters include: Peru, India, Uganda, Ethiopia, Mexico and Cote Ivoire. Over the past week, robusta coffee, commonly used in instant coffee, has also seen prices soar to levels not seen since the 1970s.
Arabica coffee futures (2016-2024)
The rise in the price of coffee in 2024 has mainly been driven by climate-related supply concerns. Brazil, the world’s biggest Arabica coffee grower, suffered a severe drought at the start of the year, which greatly affected crop output. The US Department of Agriculture’s Foreign Agricultural Service (FAS) has projected Brazil’s coffee inventories at 1.2 million bags at the end of the 2024/25 season in June, down 26% over the previous season.
The supply concerns are, nonetheless, not limited to Brazil. Over the past year, Vietnam has also experienced a combination of dry conditions during the growing season and excessive rain at harvest time, damaging coffee crops. Additionally, heavy rains in Costa Rica destroyed close to 15% of the country’s annual coffee harvest, according to the ICAFE Coffee Institute.
These supply challenges have triggered a price increase and are projected to put pressure on cafes and roasters. Nestle, the biggest coffee manufacturer in the world, recently revealed its plans to lower pack sizes and boost retail prices to offset the growing costs.
Experts have warned that these price hikes could continue into next year, depending on harvest outcomes in Brazil and Vietnam and global economic conditions.
Climate change has also affected the cost of other food commodities this year, with cocoa prices reaching record highs in 2024.