Coffee prices soar to record highs amid supply concerns
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Global arabica coffee prices surged unprecedentedly on Wednesday, reaching record highs above $3.60 per pound.
This spike is being driven by a combination of dwindling supplies from Brazil, the world's largest coffee producer, and ongoing concerns about the upcoming harvest.
According to dealers, approximately 70%-80% of Brazil's current arabica harvest has already been sold, leaving little supply available for new trades.
Brazil, which produces nearly half of the world's arabica beans, is facing a situation where demand is outpacing supply, exacerbating price hikes.
Although Brazil's weather has improved after a severe drought in recent years, the country's upcoming arabica crop is expected to be 4.4% smaller than last year, according to Brazil's food supply agency Conab.
The global coffee market continues to grapple with tight supplies, with coffee-producing nations such as Vietnam and Central American countries also experiencing delays in getting their crops to the market.
Arabica coffee futures, traded on the ICE exchange, hit a record high of $3.6945 per pound earlier in the day, marking an increase of nearly 15% this year. The contract later closed at $3.6655 per pound, reflecting a 2.5% gain.
Meanwhile, the price of robusta coffee, a cheaper variety commonly used for instant coffee, rose by 0.9% to $5,609 per metric ton.
India, the world's fifth-largest producer of robusta, is also expected to see a more than 10% decline in coffee exports in 2025 due to lower production and reduced carry-forward stocks from the previous season.
Dealers reported that farmers in both India and Vietnam are holding back their sales in anticipation of further price increases.
In Brazil, farmers prioritise local sales over exports, even though exports fetch higher prices, due to an improved financial position.
The country's traditional buffer stocks have been depleted to about 500,000 bags, compared to the typical 8 million bags, heightening concerns that any adverse weather conditions could significantly impact global prices.
Sucden, a prominent coffee broker, forecasts that the global coffee market will experience its fourth consecutive deficit this season, further tightening supplies and pushing prices higher.
Raw sugar rose by 1.1% to 19.45 cents per pound in other commodities, rebounding from a five-month low, while white sugar increased by 2.2% to $522.90 per ton. Cocoa futures also saw gains, with New York cocoa rising by 3.3% to $11,745 per ton and London cocoa up by 1.6% to £9,138 per ton.
With concerns over supply disruptions and declining stocks, the coffee market remains on edge as prices continue to climb.
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