by Gelet Martínez Fragela
An ongoing drought in Brazil coupled with bad weather in Vietnam has contributed to a significant spike in the price for Arabica and Robusta coffee beans, according to reports.
Arabica beans, now selling for more than $3.44 a pound have increased more than 80% this year, and Robusta beans also hit a high in September, marking a record high for international commodity markets.
Coffee is the world’s second most traded commodity by volume after crude oil, and its demand is spiking. During the last 10 years, coffee consumption in China has more than doubled.
“Demand for the commodity remains high, while inventories held by producers and roasters are reported to be at low levels,” said Fernanda Okada, a coffee pricing analyst at S&P Global Commodity Insights who recently spoke to the BBC. “The upward trend in coffee prices is expected to persist for some time,” she explained.
The shift in price comes as Brazil and Vietnam continue to endure severe weather, which have created fear in the commodities market about the availability of coffee next year.
“Rivers in the Amazon basin fell to record-low levels in October 2024 as drought gripped vast areas of South America. Months of diminished rains have amplified fires, parched crops, disrupted transportation networks, and interrupted hydroelectric power generation in parts of Brazil, Bolivia, Colombia, Ecuador, Peru, and Venezuela,” says an October report from NASA Earth Observatory.
Prakrut Kansara, a hydrologist at Johns Hopkins University recently said the drought is partially related to the lingering impact of El Niño, a climate pattern associated with a warm layer of water in the Pacific that usually shifts rainfall patterns and reduces rain in the Amazon during the late summer.
Kansara, who also works as part of a USAID-NASA SERVIR project that develops analysis for Brazil’s National Center for Monitoring and Early Warning of Natural Disasters (CEMADEN) was part of a team that indicated that the western Amazon in Brazil, northern Peru, eastern Colombia, and southern Venezuela received 6 inches less rain than usual in July, August, and September, says the report.
Reports from Reuters have indicated that the “drought impacts have been far-reaching,” even effecting power supplies in Brazil and Ecuador, and CEMADEN has called them the most intense and widespread experienced the South American nation. According to the Brazilian meteorological warning center, the number of Brazilian municipalities facing extreme drought increased significantly from September to October.
So far, retailers have tried to absorb the spike in costs to keep the market even without it hitting the pocketbooks and wallets of loyal coffee drinkers. But many coffee brands might have to raise prices after the new year.
“Brands like JDE Peet (the owner of the Douwe Egberts brand), Nestlé and all that, have [previously] taken the hit from higher raw material prices to themselves,” said Vinh Nguyen, the chief executive of Tuan Loc Commodities in an interview with the British news agency. “But right now they are almost at a tipping point. A lot of them are mulling a price increase in supermarkets in [the first quarter] of 2025.”
One major coffee company based in Italy, Lavazza, said it took significant measures to absorb the spike in costs so it would not impact their client base, but ultimately had to make some changes.
“Quality is paramount for us and has always been the cornerstone of our contract of trust with consumers,” the Italian coffee company told BBC News. “For us, this means continuing to tackle very high costs. So we have been forced to adjust prices.”
One senior Nestlé executive also recently told investors at an event that the industry was facing “tough times,” and that the major international corporation may have to increase its prices and change its pack sizes.
“We are not immune to the price of coffee, far from it,” said David Rennie, Nestlé’s head of coffee brands.
If the price of coffee spikes significantly, it will be a first for some young people during their lifetime. The last time coffee hit a record high was 1977. The reason? Unexpected snowfall in Brazil destroyed coffee plantations.
Some experts are now saying that Brazil’s current drought is what’s driving the price up now.
“Concerns over the 2025 crop in Brazil are the main driver,” Ole Hansen, head of commodity strategy at Saxo Bank told BBC. “The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail.”
Brazil and South America aren’t the only places that could impact the coffee market, reports say. While Brazil produces mostly Arabica beans, Vietnam, which produces the main supply of robusta coffee beans has also faced both drought and heavy rainfall.
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Gelet Martínez Fragela is the founder and editor-in-chief of ADN America. She is a Cuban journalist, television producer, and political refugee who also founded ADN Cuba.
