Coffee prices dipped slightly on Friday after reaching their highest levels in nearly half a century during the trading session, driven by tightening supplies as Brazil, the world’s largest coffee producer, faces challenges recovering fully from this year’s drought.

Traders reported that some Brazilian farmers delayed delivering this year’s crop in hopes of securing higher prices in the future. This has led to temporary supply shortages and significant financial losses for traders who were expecting to receive the coffee.

Arabica coffee futures on the ICE exchange fell 1.5% to settle at $3.1805 per pound after hitting $3.3545 per pound earlier in the session, the highest level since 1977.

Arabica coffee prices have surged by approximately 71% this year, making it one of the best-performing commodities alongside cocoa, which has more than doubled in price.
In a note issued on Friday, Commerzbank stated, “The price trend is very similar to that of cocoa at the start of the year. The reasons are also comparable. For cocoa, poor harvests in the leading producers, Ivory Coast and Ghana, were the main issue. For Arabica coffee, the concern revolves around a poor crop in Brazil next year due to drought.”

Brazilian coffee trading companies Atlantica and Cafebras announced on Wednesday that they are negotiating with creditors in court, stating that 900,000 bags of coffee, each weighing 60 kilograms, have not been delivered as agreed by farmers.

Meanwhile, the price of robusta coffee, a more affordable bean commonly used in instant coffee, also reached its highest level in 47 years on Friday.

The global coffee market remains affected by weather-related issues and production fluctuations, raising concerns about long-term supply stability, especially with the continued rise in global demand.