Arabica coffee prices have hit their highest level since 1977 as concerns grow about tight global supplies.
Continuous arabica coffee futures on the ICE rose 2.8% to $3.175 a pound, near the all-time record of $3.356. Futures are up nearly 69% in the year-to-date.
The surge reflects weather concerns in powerhouse producer Brazil, including an extended drought and high temperatures.
Despite good coffee flowering on recent rains in the country, there are worries that the flowers might not attach to the branches, which could lead to production losses in the next season, ING analysts said in a note.
Higher exports this year on stronger prices have also reduced stockpiles, and a low production season could significantly tighten supplies, ING added. Brazil exports rose 8.1% on-month to 4.9 million bags of coffee in October, a record for the month.
Production in Brazil has underperformed for the last four years on adverse weather and if that trend becomes a norm, high coffee prices are needed to rationalize a further supply response, Citi analysts wrote. That said, production in other countries has been growing, a trend that is likely to intensify over the next few years in response to higher prices.
Citi raised its base case 2025 estimate for coffee prices to $2.80 a pound from $2.38, and expects prices to normalize at $2.65 a pound in 2026.
“Nevertheless, we note the large uncertainty on the health of Brazilian crops after the adverse weather, and general production issues poses the possibility of falling into a structural deficit,” the U.S. bank added.
Robusta coffee futures also rose 2.4% to $5,299 a metric ton.
Write to Joe Hoppe at joseph.hoppe@wsj.com
