With the deterioration of Brazil’s crop, a record rise in global coffee prices

Coffee prices rose in New York Stock Exchange trading on Tuesday to a record high.
This is in light of increasing fears of a shortage in global supplies, making it one of the most expensive crops this year.
This comes while the Agricultural Crops Trading Company reduced Volkiv.
To extend its future outlook for the crop to Brazil, the largest coffee producer in the world, against the backdrop of the prolonged severe drought to which the country was exposed.

Brazilian production declines

Brazil’s production is expected to reach 34.4 million packages of Arabica coffee, which is the preferred type for producing specialty beverages.
This number is 11 million packages less than estimates last September, according to a presentation seen by Bloomberg News Agency.

Continuing deficit in the market

At the same time, Volkiv expects global coffee production to fall short of demand during the 2025-2026 season by 8.5 million packages.

The market deficit continues for the fifth year in a row.
The prices of futures contracts for Arabica coffee rose by more than 80% during the current year in light of the obstacles facing the crop of the main coffee producers.
This threatens to raise selling prices for consumers.

Huge price rise

On Tuesday, prices rose by 5.5%, reaching their highest levels since the start of collecting and publishing this data in 1972.
By 9:30 a.m. New York time, Arabica futures prices rose 4.6% to $3.4540 per pound.
Prices exceeded the previous record set in 1977, when Brazil was hit by a devastating frost that led to a significant deterioration in the crop in 1975.
“We are currently witnessing a strong fundamental phase in the coffee market, which we expect to maintain high price levels,” said Victoria Kozak, research associate at Sucden Financial.

Pressure from high prices

At the same time, other links in the coffee supply chain are under pressure from high prices.
When prices rise, brokers ask producers and exporters to place more cash in the form of deposits to cover potential losses.
This increases the cost of hedging used in the futures market.
Also, some traders who sold futures contracts are forced to buy them back to stay out of the market.
This makes prices rise in a vicious circle.