Coffee Prices Hit Record Highs Amid Global Supply Crisis
Coffee prices surged to new peaks in 2024, reflecting a tumultuous year for the industry. On Tuesday, prices jumped by 5%, reaching $347 per contract—equivalent to 100 pounds—marking an all-time high. Over the course of the year, prices have soared by an astonishing 83%, surpassing the records set in 1975 during Brazil’s catastrophic “Black Frost” that decimated coffee plantations.
The current surge stems from mounting concerns over a global supply crisis, which could elevate coffee from an everyday staple to a luxury item. Global food prices have risen by over 25% since 2020, driven by inflation and recurring supply shocks, placing coffee among the hardest-hit commodities.
Severe drought in Brazil throughout 2024 has heightened fears about the country’s coffee production, while Vietnam—the world’s second-largest coffee producer—has faced its own challenges. A brutal dry spell in Vietnam’s main coffee-growing region exacerbated supply concerns, highlighting the fragility of global coffee production. Together, Brazil and Vietnam account for over half of the world’s coffee supply, making these disruptions particularly alarming.
The International Coffee Organization (ICO), an intergovernmental body supported by the United Nations, reported in July 2024 that its composite coffee price index hit its highest level in 13 years, averaging $2.27 per pound. The scarcity of robusta beans, a cost-effective option, has intensified demand for arabica coffee—a premium variety favored by specialty coffee chains.
Experts like Ryan Delaney, founder and chief analyst at the Coffee Trading Academy, have warned of an acute supply shortage. “There simply isn’t enough coffee in the world,” Delaney noted. Nestlé, the world’s largest coffee producer, announced price hikes in November 2024, along with smaller package sizes to mitigate the impact of soaring bean costs on its profit margins.
According to Ole Hansen, Head of Commodity Strategy at Saxo, coffee has emerged as one of 2024’s top-performing commodities, driven by extreme weather conditions and global reliance on a few key suppliers. Arabica coffee futures in New York soared to a 47-year high this year, rising 83% year-to-date. Brazil experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crops could fail.
In December, Volcafe—a leading global coffee trader—slashed its 2025/26 production forecast by nearly 25%, projecting global arabica coffee output at 34.4 million 60-kilogram bags, down 11 million from earlier estimates. This significant reduction could result in a global production deficit of 8.5 million bags in 2025/26, marking the fifth consecutive year of supply shortages.
Coffee remains one of the most traded commodities worldwide, often ranked second only to crude oil in terms of volume. Billions of people rely on it daily for energy and focus. However, climate change and economic challenges are transforming this essential beverage into a potential luxury. Increasing demand from emerging markets, particularly China, has further intensified pressure on global supply chains.
As the coffee industry braces for continued volatility, the question looms: will coffee remain accessible to the average consumer, or will it transform into an indulgence reserved for the few?
