Coffee prices reach 27-year high

Coffee prices in Australia may continue to rise as a Bloomberg market report reveals coffee futures climbed to their highest since 1997.

Bloomberg reports that coffee prices have soared this year due to major supply disruptions in key producers such as Brazil and Vietnam, with Robusta hitting the highest since the 1970s. This includes concerns that supplies from Brazil will slow after a long drought impacted coffee trees, which may reduce the next season’s output.

The report also says sellers throughout the supply chain have raised prices and scrapped discounts to protect their margins, with warnings of more to come.

The potential for next years’ harvest “has certainly been impacted by the long dry and hot period that affected Arabica coffee crops until September,” according to Rabobank analyst Guilherme Morya.

Guilherme adds this is true despite rains in October leading to an “excellent flowering” of the trees. This is due the flowers potentially not fixating on branches, putting the crop in danger as flowers later develop into the cherries that contain the beans.

Adding to this pressure is the possibility that a strong pace of Arabica exports this year might result in low stockpiles by the end of the current season, according to Bloomberg. The US Department of Agriculture’s Foreign Agricultural Service says Brazil coffee inventories may decrease by 26 per cent when the season ends in June 2025 compared with the previous year.

The recent surge follows calls from the coffee industry for cafes across Australia to raise their prices.