From bad to worse for South Africans who drink coffee

Coffee prices continue to rise as bad weather in Brazil and Vietnam, two of the largest coffee bean producers in the world, impacts supply. 

In early February, coffee prices crossed $4 per pound in commodities markets – a new all-time high and more than double the price of a year ago. 

This will translate into higher prices for consumers as more expensive beans result in pricier brews. The price increase is also expected to hurt demand for the popular beverage. 

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.

As of 6 February, the price has pulled back slightly but remains around all-time highs at $3.97 per pound. 

This is likely to be a temporary respite, with economists and analysts forecasting coffee prices to rise by over 10% in the coming months and to continue increasing throughout 2025. 

Bad weather in two of the world’s largest producers, Brazil and Vietnam, has dramatically diminished the crop yields in these countries. 

In Brazil, high temperatures meant that the flowers of coffee trees on their plantations did not transform into berries, significantly reducing the crop yield. 

With a lower-than-usual supply from Brazil expected in 2025, global stockpiles are set to fall to the second-lowest level in 65 years. 

“We should still have some additional volatility until the next crop arrives,” said Pavel Cardoso, the president of Brazil’s Coffee Industry Association.

One of the country’s largest exporters, Comexim, said on 4 February that it expects Brazil’s output of both arabica and robusta beans to decline in the 2025-2026 crop year. 

This is particularly concerning given that over the past four years, the world has been consuming more coffee than it has produced, reducing global stockpiles and making the market extremely vulnerable to shocks. 

Vietnam experienced a significant drought in 2024, limiting crop yield, after typhoons significantly damaged plantations. 

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.

A more recent driver of higher coffee prices is the threat of tariffs from the Trump administration on South American countries. 

In particular, the threat of tariffs on Columbia, the world’s third-largest coffee producer, has resulted in commodities traders betting the price will rise. This also introduces further uncertainty in global markets. 

The end result is that retail coffee prices are going to rise between 20% and 25% in the next few months, Bloomberg commodity analyst Javier Blas said. 

However, there is good news over the longer term. A higher price for coffee beans likely to result in greater supply, Rabobank analyst Carlos Mera said. 

Furthermore, crops in Brazil’s primary growing areas are expected to see better weather in the coming weeks, potentially boosting the country’s supply in 2025.