By Joe Hoppe


Arabica coffee prices hit their highest ever level on global supply worries, beating a prior record set in 1977.

Continuous arabica coffee futures on the ICE rose 4.1% to $3.44 a pound at 1335 GMT, having reached as high as $3.48 earlier in the session. This exceeds the prior record of $3.356, set in 1977.

Arabica coffee futures are up more than 83% in the year-to-date on concerns over the 2025 harvest in Brazil. The South American producer had its worst drought in 70 years in August and September, swiftly followed by heavy rains in October.

Despite good coffee flowering due to the recent rains, there are concerns the flowers might not attach to the branches, which could lead to production losses in the next season.

On Tuesday, top coffee trader Volcafe cut its 2025-2026 production outlook by nearly 25% to 34.4 million bags of arabica beans, pointing to a fifth consecutive year of deficits. This represents a cut of nearly 11 million bags from the September estimate, according to a Bloomberg report.

Several soft commodities have surged in the year-to-date on drought and high temperatures in major producers, along with a global reliance on supplies from relatively few regions and countries, Saxo Bank's Ole Hansen said.

Arabica alternative robusta coffee is up nearly 80% in the year-to-date to $5,471 a ton on a challenging growing season in top-producer Vietnam, where dryness in the growing period was followed up by heavy rains at harvest time. Cocoa has more than doubled to $10,450 a metric ton in the year to date.

Production of soft commodities has struggled to meet rising demand, with both coffee and cocoa grown in a narrow tropical band. This concentration makes soft commodities particularly vulnerable to adverse weather conditions--particularly in coffee powerhouses Brazil and Vietnam, which account for around 56% of global production, Hansen added.


Write to Joe Hoppe at joseph.hoppe@wsj.com


(END) Dow Jones Newswires

12-10-24 0904ET