Coffee prices rise 6% in one day

The price of Arabica coffee futures hit a new record high on Monday in New York, as weather forecasts show dry weather in the main regions of Brazil where this agricultural raw material is grown.

On the ICE exchange, the price of Arabica coffee, the more expensive variety preferred by coffee chains, reached a historic high of $4.30 per pound on Monday, up 6% from the previous day (one pound = almost 500 grams). Since the beginning of the year, the price of coffee has increased by more than 30%, after a 70% increase in 2024. Yesterday, the price had lost ground, being around $4.20 per pound.

"Panic has finally set in, and prices will continue to rise," warns Bob Fish, co-founder of the Biggby Coffee franchise, which operates 350 cafes in the United States, quoted by Reuters. In his opinion, only two factors could put a brake on this rise: either an extraordinary harvest in Brazil and Vietnam, but which is not expected before August 2026; or a massive drop in demand, triggered by rising prices in consuming countries.

Already, the accelerated increases have affected demand in major markets and are starting to slow down coffee consumption, once explosive, in emerging markets.

According to Bloomberg, coffee production in Brazil, the world's largest producer of the profile, has suffered after a prolonged drought. Brazil's record early-season exports are adding to the current supply pressure, as farmers in the country have sold a large portion of their crop so far this year, reducing the quantities available for delivery now.

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

Brazil accounts for nearly half of the world's Arabica coffee production. While Brazilian farmers have sold about 85 percent of their crop so far, they are in no hurry to sell the rest of their beans as the country's currency, the real, appreciates against the dollar, reducing their income.

Fund managers have increased their bets on the rise in the price of Arabica coffee, and although Pavel Cardoso says some of this movement could disappear after the new crop comes in in May, concerns about supply remain.

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