Bad news for coffee lovers in South Africa

Coffee prices have hovered around all-time highs over the past two months and are set to rise further throughout 2025 as bad weather continues to impact supply from Brazil and Vietnam. 

The global price of coffee as a raw commodity surged 68.42% in 2024 to an all-time high of $3.49 per pound at the end of the year. 

The last time the price for arabica beans, the world’s most popular variety, traded that high was in 1977 when snow destroyed large areas of Brazilian plantations.

Since then, the price has pulled back slightly but remains elevated at $3.19 per pound. 

The chief economist of the Agricultural Business Chamber of South Africa (Agbiz), Wandile Sihlobo, warned in a recent social media post that local coffee shops would have to adjust their prices. 

Sihlobo expects coffee prices to remain elevated for some time and, as a net importer, South Africa will have to follow global pricing trends. 

He explained that there are major supply constraints in Brazil, which supplies around 39% of all coffee beans due to bad weather in the South American country. 

This has been coupled with bad weather in Vietnam, another major coffee producer. Sihlobo said the outlook for supply from both countries in 2025 is not promising, with supply constraints likely to last. 

Brazil has experienced wildfires in one of its main coffee regions outside of São Paulo, devastating producers and limiting exports. 

The country has also experienced droughts and low moisture levels, resulting in coffee trees having fewer flowers and, as a result, less fruit and beans. 

“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,” the head of commodity strategy at Denmark’s Saxo Bank, Ole Hansen, said in a research note.

Vietnam also faced a significant drought earlier this year and considerable damage because of typhoons, which severely impacted coffee harvests. 

Coffee consumption and culture have also increased in the last several months, especially in big markets like China. 

This has led to more demand and higher pressure on supply chains, which are still recovering from the pandemic and other geopolitical challenges, such as conflict in the Middle East. 

Hansen said that coffee prices are unlikely to come down anytime soon, as history suggests supply will take years to bounce back after severe weather events. 

“Like cocoa, coffee is grown in a relatively narrow tropical band, with key producers including Brazil, Vietnam, Colombia, and Ethiopia,” he said.

“This concentration makes it particularly vulnerable to adverse weather conditions, especially in Brazil and Vietnam, which account for approximately 56% of global production.”

The US Department of Agriculture’s Foreign Agricultural Service (FAS) has projected Brazil’s coffee production for the 2024/25 season at 66.4 million metric tons (MMT), a decrease from their previous forecast of 69.9 MMT.

The FAS also estimated that Brazil’s coffee inventories will be at 1.2 million bags by the end of the 2024/25 season in June, representing a 26% decline compared to the previous season.