According to a Bloomberg market report, coffee futures in New York has climbed to its highest since 1997 due to mounting concerns for crop supplies.
Arabica rose as much as 3 per cent on 25 November with Arabica futures prices advancing 64 per cent in 2024. Bloomberg said coffee prices have soared this year due to major supply disruptions in key producers such as Brazil to Vietnam, with Robusta hitting the highest since the 1970s.
The report says concerns have mounted that supplies from Brazil will slow after a long drought that impacted coffee trees, which may reduce next season’s output.
The potential for next years’ harvest “has certainly been impacted by the long dry and hot period that affected Arabica coffee crops until September,” according to Rabobank analyst Guilherme Morya.
Morya adds this is true despite rains in October leading to an “excellent flowering” of the trees. This is due the flowers potentially not fixating on branches, putting the crop in danger as flowers later develop into the cherries that contain the beans.
Adding to this pressure is the possibility that a strong pace of Arabica exports this year might result in low stockpiles by the end of the current season, according to Bloomberg.
The US Department of Agriculture’s Foreign Agricultural Service sees Brazil coffee inventories reaching only 1.2 million bags when the current season ends in June 2025, a 26 per cent decrease versus the previous year.
Additionally, the report says along the supply chain sellers have raised prices and scrapped discounts to protect their margins, with warnings of more to come.
