According to Enterprise & Business
According to Bloomberg, price coffee Arabica, a popular bean in specialty coffees, has increased by 3.9%, reaching its highest level since 1977 and is now up nearly 70% this year. Severe drought in Brazil earlier this year raised concerns about the country’s output. Meanwhile, the main coffee growing area in Vietnam also faces prolonged drought during the cultivation period, along with heavy rain appearing right when the harvest begins.
Brazil and Vietnam are the two largest coffee producers in the world. In particular, Brazil focuses on high-quality arabica beans and Vietnam dominates the robusta market with cheaper prices.
This price increase is putting greater pressure on cafes and roasters, causing costs for consumers to increase sharply. Suppliers in the supply chain have increased prices and cut discount programs to protect profit margins. Nestlé SA, the world’s largest coffee maker, said in November that it would increase product prices and reduce packaging sizes to minimize the impact of rising coffee bean prices.
“The factors driving this price increase are complex, including concerns about Brazilian production in the 2025-2026 season, along with transportation and logistics challenges.”, analyst Carlos Mera of Rabobank commented.
He also emphasized that factors such as uncertainty about the timing of the European Union’s anti-deforestation regulations and the push to sell to the US amid the threat of trade tariffs under the Trump administration also contributed. part in this change.
Arabica coffee prices currently increased 2.6% to 3.17 USD/pound in New York, marking the sixth consecutive day of increase. The 14-day relative strength index (RSI) has surpassed 70, suggesting the market may be in overbought territory.
Arabica coffee prices reach highest level since 1977 (Source: ICE Futures US, Bloomberg)
Robusta coffee, popular in instant coffee products, is also up 88% this year in London. Meanwhile, sugar price Crude rose and cocoa fell slightly in Wednesday’s trading session in New York.
In Brazil, coffee producers are not currently selling large quantities because most of the current harvest has been consumed. This makes supply scarce until the new crop starts in May, according to Mr. Thiago Cazarini, a broker.
Current concerns about arabica supplies are further exacerbated by other growing countries also recording unsatisfactory harvests. Colombia, the second largest Arabica producer, is still recovering from dry El Niño weather, while recent heavy rains have raised concerns about crop damage in Costa Rica and Honduras.
Rising hedging costs due to larger margin requirements, along with the possibility of producers defaulting on contracts, have increased panic buying, according to analysts at the trading firm. Sucafina SA coffee solution.
This year’s price rally is also accompanied by fund managers maintaining large bets on higher prices. Data from the US Commodity Futures Trading Commission shows that the net long position in Arabica, although not yet at its peak at the beginning of the year, is still at a historic high.
