Coffee prices have hit a record high, rising to their highest level since 1997. This was due to serious concerns about the harvest in major coffee-producing countries, which pose threats of further cost increases for both producers and consumers. Coffee prices have reached new heights this year, which is affecting the global market.

As of November 25, 2024, prices for Arabica, an elite coffee variety used for making drinks, have increased by 3%. The high prices are observed due to supply disruptions that have occurred in key coffee producers, from Brazil to Vietnam. In addition, prices for the cheaper Robusta variety, used for making instant coffee, have reached their highest level since the 1970s.

The main reason for the price increase is the serious problems with coffee production in the largest producing countries, in particular in Brazil. The hot and dry weather that lasted throughout the year has damaged coffee trees, which is likely to lead to a significant reduction in the harvest next season. “Supplies from Brazil may slow down due to the prolonged drought that has damaged coffee trees, which could affect production next season,” analysts say.

Guilherme Moria, an analyst at Rabobank, emphasized in his report that the prolonged period of high temperatures and dryness had a significant impact on the arabica coffee crop, which was harvested until September this year. This situation will negatively affect coffee supplies in the coming months.

Another important factor causing pressure on the coffee market is the high rate of arabica exports. This could lead to a significant reduction in stocks by the end of the current season. According to the USDA’s Foreign Agricultural Service, Brazil’s coffee stocks could be as low as 1.2 million bags by June 2025, down 26% from a year earlier.

The rise in coffee prices shows how agricultural commodities continue to weigh on consumer budgets, even as wholesale prices for other products have eased somewhat from record highs seen in early 2022.

In commodity markets, Arabica futures are also continuing to rise. As of 10:23 a.m. in New York, Arabica futures were up 2.4% to $3.0935 per pound (nearly half a kilogram). Overall, coffee prices are up 64% since the start of the year, reflecting a steady rise in the value of the popular beverage.