Global Coffee Prices Hit 47-Year High on Supply Squeeze
Global coffee prices have surged to their highest level since 1977, driven by weather-related supply disruptions, increased stockpiling, and growing global demand, forcing major retailers to signal price increases for consumers.
March 2025 arabica coffee futures jumped 4.6% to $3.2305 per pound on Wednesday on the Intercontinental Exchange (ICE), marking a more than 70% rise this year. Robusta coffee, typically used in instant coffee, rose 6.9% to $5,533 per metric ton, up 80% in 2024.
Brazil, the world’s largest coffee producer, faces significant supply constraints after experiencing its worst drought in 70 years, followed by heavy rains that threaten flower development in coffee plants. Brazilian farmers, having sold 70% of their current crop, are holding remaining stocks in anticipation of further price increases. Other major producers, including Colombia, Honduras, and Vietnam, are also grappling with adverse weather conditions.
The uncertainty surrounding Brazil’s current growing season is raising significant concerns about future production, Guilherme Morya, senior beverages analyst at Rabobank, wrote on Monday.
Market pressures are intensifying as European buyers accelerate purchases ahead of new EU deforestation regulations, which recently received a 12-month implementation delay. Meanwhile, US consumers, who have seen coffee prices rise steadily since July 2021, face additional pressure from potential import tariffs under the incoming Trump administration. The think tank Third Way estimates these tariffs could add $0.23 per pound to coffee prices.
Supply chain challenges persist with logistics bottlenecks at Brazilian ports leaving 1.7 million bags of coffee stranded, while non-commercial speculators are entering the market, adding to price volatility. This volatility particularly affects roasters buying on a “hand-to-mouth” basis due to high financing costs.
Nestlé (SWX: NESN), the world’s largest coffee maker, has already announced price increases, as consumer preferences shift toward premium arabica-based beverages.
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