Online Reporter
A record-breaking rally for coffee prices shows no sign of slowing down, analysts say, with some warning it could take years for one of the world’s most traded commodities to recover.
Arabica coffee futures with March delivery hit a fresh intraday high of 348.35 cents per pound on Tuesday, notching their highest level in nearly 50 years.
The contract has since cut some of its gains but remains up a whopping 70 percent year-to-date.
The last time the price for arabica beans, the world’s most popular variety, traded that high was in 1977 when snow destroyed large areas of Brazilian plantations.
Renowned for their smooth taste and sweet flavor, arabica beans make up between 60 percent to 70 percent of the global coffee market.
They are commonly used in espressos and other barista-made coffee.
Drought and high temperatures, alongside a global reliance on supplies from relatively few regions, are regarded as the primary drivers for the recent price rise.
Robusta futures, meanwhile, also climbed to a fresh record high in late November.
Robusta beans are known for their strong and bitter flavor and are typically used in instant blends.
The extraordinary price rally for coffee, which is considered the second-most traded commodity by volume, after crude oil, comes amid concerns over the 2025 crop in Brazil, by far the world’s largest producer.
“The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said in a research note published Tuesday.
For some, the poor growing weather in Brazil means it could take a long time for coffee prices to unwind. – CNBC Africa
