Global Coffee Prices have Hit Highest Level in Half Century

Global coffee prices have hit their highest level in half a century, driven by weather changes in Brazil and Vietnam, the world’s largest coffee producers.

Three years of bad weather in Brazil and Vietnam have disrupted global coffee supplies, depleting stocks and sending benchmark ICE prices to a peak of $3.36 per pound.

The record high prices have prompted companies such as Nestle to raise prices, pressuring consumers to seek cheaper alternatives to the beverage amid rising living costs, according to Reuters.

The only beneficiaries of these increases this year are farmers, but prices are also a challenge for traders who face crippling hedging costs on exchanges and a rush to get their hands on beans they bought in advance.

Brazil, which produces nearly half the world’s Arabica beans, has experienced one of its worst droughts on record this year.

Despite improved weather and rain in October, soil moisture remains low and experts say trees are producing too many leaves and too few flowers that turn into beans.

Consulting firm StoneX expects Brazil’s Arabica output to fall by 10.5 percent to 40 million bags next year, but this will be offset to some extent by higher Robusta production, cutting the country’s overall crop by 0.5 percent.

In Vietnam, which produces about 40% of the Robusta beans typically used to make instant coffee, heavy rains have fallen since October after a severe drought earlier this year.

In Vietnam, the crop could shrink by as much as 10% over the 12 months to the end of September 2025, deepening the global Robusta shortage.

As a result, experts are forecasting another year of weak global coffee production.

Traders in Brazil are seeking to restructure debts after declaring bankruptcy due to high coffee prices, lingering hedging costs and delayed deliveries.

Higher futures prices are increasing the upfront payments traders must make to protect against trading losses, creating further pressure on the industry.