Coffee prices continue to surge to highest since 1977

Coffee futures in New York have continued to climb, with prices reaching a 47-year high as concerns mount for crop supplies.

In a Bloomberg market report, it was revealed Arabica has climbed as much as 3.9 per cent, hitting the highest since 1977 with a 70 per cent increase this year alone.

The report attributed the price surge to a severe drought in Brazil earlier this year fuelling worries about the country’s output. This is on top of concerns about Robusta in Vietnam, after a key coffee belt was hit by dryness during the growing period and heavy rains arrived at the start of harvest.

The countries are the two biggest global coffee growers, with Brazil exporting mostly Arabica and Vietnam leading the market for the cheaper Robusta.

According to Bloomberg, the price surge may also be felt by consumers as sellers along the supply chain have raised prices and scrapped discounts to protect their margins.

Nestlé SA, one of the world’s biggest coffee companies, said in November that it will raise prices and make packs smaller to blunt the impact of more expensive beans as part of its Capital Markets Day plan to fuel and accelerate growth.

Rabobank analyst Carlos Mera says in addition to concerns for Brazil’s output in the upcoming 2025 to 26 season, other factors are the uncertainty over the start date for the European Union Deforestation Regulation (EUDR) and the front loading of sales to the United States ahead of potential trade tariffs under a Trump administration.

According to broker Thiago Cazarini, coffee growers in Brazil are not selling large volumes at the moment. Producers have already sold a large percentage of the current harvest and that leaves buyers with tight supplies until the next crop is harvested starting in May.

In addition to Brazil, there are supply concerns for other key coffee growing countries. Second-largest Arabica producer Colombia is still recovering from impacts of dry El Niño weather earlier this year, while recent heavy rainfall brought concerns over potential damage to crops in countries including Costa Rica and Honduras.