The biggest problems of coffee producers
There are no signs of a slowdown in the growth of coffee prices. Analysts warn that it could take years before the industry’s supply-strangling problems are resolved.
What are the biggest problems from the producers’ point of view? These are droughts and high temperatures that harm the harvest. Prices are also skyrocketing because supply is concentrated in just a few regions. This lack of diversification is risky, because if a given area suffers from natural disasters, weather anomalies or other problems, it greatly harms total global production.
Coffee prices highest in almost 50 years
The price of Arabica in futures contracts for March delivery reached on Tuesday the highest level in almost 50 years. The values of the above-mentioned instruments have increased by almost 70% this year. The last time prices for this variety were at such astronomical levels was in 1977, when snowfalls destroyed huge crops on Brazilian plantations. Arabica accounts for 60-70 percent. the entire coffee market. It is used in espresso and popular among baristas.
Poor coffee harvest in Brazil
The eyes of investors and consumers from around the world are on Brazil – there are concerns about the harvest of the largest coffee producer in the world. The country experienced the most severe drought in 70 years in August and September, followed by heavy rains in October. This may severely damage next year’s crops.
Coffee production is particularly vulnerable to bad weather conditions because it is concentrated in just a few countries. Apart from Brazil, this also includes Vietnam, Colombia and Ethiopia.
Coffee prices in 2025
Can we expect price drops? Poor weather conditions for coffee in Brazil could mean that we will have to wait for years for price drops. As history shows, in the past there were price adjustments for this only when supply increased and warehouses were filled. There are minimal chances that the market will achieve this within a few months under current conditions.
Supply is limited, but demand is growing. Largely due to China, which has been consuming more and more coffee in recent years.
Analysts believe that further increases in final prices for consumers are inevitable. The industry tycoon Nestle has already announced increases and is also threatening to reduce the size of packaging.
