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World coffee and sugar prices surged as Brazil, the top producer of both, faces one of its worst droughts on record. Arabica coffee futures hit a 13-year high of $2.7505 per pound, while raw sugar futures peaked at 23.71 cents per pound. The drought has affected farmland, with fires breaking out in sugar regions, and arabica coffee is particularly vulnerable during its critical flowering stage. Analysts predict that rains may arrive by mid-to-late October, but overall, the weather outlook remains dry. Meanwhile, robusta coffee prices in Vietnam fell ahead of the new harvest, though earlier adverse weather is expected to impact the crop.

Key Highlights

* Brazil's severe drought boosts coffee and sugar prices.

* Arabica coffee futures reach a 13-year high on ICE.

* Raw sugar futures hit a 7-month peak before retreating slightly.

* Vietnam's robusta coffee prices drop ahead of harvest.

* Brazil awaits rains, but relief may come late in October.

World coffee and sugar prices have surged to new highs as Brazil, the largest global producer of both commodities, grapples with an unprecedented drought. Arabica coffee, particularly sensitive to dry conditions, saw benchmark futures on the ICE exchange hit $2.7505 per pound—a 13-year high—before closing 1.8% higher at $2.739 per pound. In the sugar market, raw sugar futures touched a 7-month peak of 23.71 cents per pound, before sliding 0.5% to close at 23.31 cents per pound.

Supporting the price surge is the ongoing drought in Brazil, which has intensified farmland fires in key sugar-producing areas. Arabica coffee is especially vulnerable as the crop is in its critical flowering phase, raising concerns about the long-term yield. Analysts from LSEG suggest that while some rain may arrive in mid-to-late October, the overall outlook remains bleak as dry conditions persist.

In other developments, Vietnam, the top producer of robusta coffee, is seeing falling local prices ahead of its new harvest. While increased output from Vietnam could help ease pressure on arabica prices due to some fungibility between the two types of coffee, earlier adverse weather may dampen the upcoming crop.

Finally

With Brazil's drought and delayed rains, coffee and sugar prices are likely to remain volatile, driven by weather patterns and global demand fluctuations.

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