Arabica coffee price hits all-time high

The price of Arabica coffee futures on Wednesday topped $4 per pound for the first time in history on the New York Stock Exchange, as concerns about global supply have driven prices to double over the past year, Bloomberg reported.

The rise is expected to accelerate the fallout for consumers as higher coffee prices translate into more expensive drinks at retail chains. The sharp increases have already hurt demand in major markets and are starting to dampen once-explosive coffee consumption in emerging markets.

According to the source, coffee production in Brazil, the world's largest producer, has been hit by a prolonged drought. Brazil's record early-season exports are adding to the supply pressure as farmers in the country have sold more of their crop so far this year, reducing the amount available for delivery now.

The most active futures contract for Arabica coffee rose 4.6% in early trading on the New York Stock Exchange on Wednesday, breaking above $4 a pound for the first time. The contract closed at $3.9775 a pound, up 3.8% from the previous session. It gained nearly 2% to $4.05 a pound yesterday.

"We're going to have some additional volatility until the next crop hits the market," said Pavel Cardoso, president of the Brazilian Coffee Industry Association.

Fund managers have increased their bets on the rise in the price of Arabica coffee, and while Cardoso says some of that movement could fade once the new crop starts to appear in May, supply concerns remain.

There are also concerns about production in Vietnam, the world's largest producer of the cheaper Robusta variety, after the country's coffee crops were hit by bad weather. Along with developments in Brazil, the situation in Vietnam is set to push global coffee stocks to their lowest level in 25 years, according to the US Department of Agriculture.

• Coffee prices on track for longest run of gains in 45 years

Coffee prices are heading for their longest run of gains since 1980, on lingering supply concerns, according to Bloomberg.

Yesterday, Arabica coffee futures were on the rise for the 12th consecutive day.

Technical analysis suggests that prices have risen too much and too fast, with Arabica coffee prices reaching an area that far exceeds the real value of the product, the cited source notes.

"Technical indicators are still overheated," says Harry Howard, a broker at Sucden Financial. However, he believes that the decrease in confirmed stocks will continue to fuel supply concerns.

Recall that a visualcapitalist.com analysis, which shows how 11 key commodities have evolved from 2019 to 2024 (annual dynamics), notes that coffee bean prices have fluctuated wildly in recent years, like many other agricultural commodities. According to the analysis, the price of coffee beans rose by 70% in 2024, at an annual rate, by 13% in 2023, after falling by 26% in 2022. In 2021, the coffee price rose by 76%, in 2020 it fell by 1%, and in 2021 it had risen by 27%.