Arabica Coffee Prices Hit Record High Amid Brazil Concerns by Amit Gupta, Kedia Advisory
Arabica coffee futures soared to a record $3.4835 per pound due to concerns over Brazil's reduced crop outlook for 2025/26. Volcafe slashed its production forecast by 11 million bags, citing drought-induced blossom failure, which will contribute to an unprecedented fifth consecutive global coffee deficit. Prices have surged 80% in 2024, driven by supply issues in both Brazil and Vietnam. Rising prices challenge traders with higher hedging costs and encourage consumers to opt for cheaper coffee alternatives. Despite potential higher earnings for farmers, the market's supply-demand imbalance continues to impact global coffee dynamics significantly.
Key Highlights
* Arabica coffee futures hit a record $3.4835 per pound.
* Brazil’s 2025/26 arabica crop forecast slashed by 11 million bags.
* A fifth consecutive global coffee deficit is projected for 2025/26.
* Coffee prices soared 80% this year due to supply concerns.
* Rising costs are reshaping consumer and trader behavior globally.
Arabica coffee futures surged to a record high of $3.4835 per pound on Tuesday, reflecting mounting concerns over Brazil’s crop outlook. By midday, prices were trading 4.3% higher at $3.4440 per pound on ICE, underscoring persistent market tension. These price hikes highlight a challenging year for the coffee market, with prices up approximately 80% year-to-date.
The sharp rise in prices stems from Volcafe’s report, which cut Brazil's 2025/26 arabica crop forecast to 34.4 million bags, an 11-million-bag reduction due to drought-induced blossom failures. Brazil, which accounts for nearly half the world's arabica supply, has struggled to rebound to production levels above 50 million bags amid ongoing climate challenges. This shortfall is expected to result in a global deficit of 8.5 million bags, marking an unprecedented fifth consecutive year of deficit.
Additional pressures are arising from Vietnam, the leading producer of robusta coffee, where production concerns have compounded the supply crunch. Rising coffee prices have boosted farmer earnings but pose challenges for traders, facing steep hedging costs and delayed bean deliveries.
On the consumer front, higher coffee prices are driving shifts toward more affordable alternatives. Nestlé, the world's largest coffee company, faced leadership changes earlier this year after losing market share as consumers switched to cheaper brands.
Finally
Arabica coffee prices remain under pressure, driven by Brazil’s reduced crop outlook and prolonged deficits. Traders should watch $3.40-$3.50 levels closely for potential market adjustments.
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