Coffee prices in New York have surged to their highest level in 47 years, driven by supply issues, threatening to increase consumer costs, according to Bloomberg.
As of November 25, the price of premium Arabica coffee beans rose by 3.1%, reaching its highest point since 1977. This year alone, Arabica prices have jumped nearly 70%.
The rise in coffee prices is largely due to disruptions in global supply. In Brazil, the world’s largest coffee producer, a severe drought in early 2024 has raised concerns about the upcoming coffee crop.
Meanwhile, in Vietnam, which also plays a major role in coffee production, drought during the growing season and heavy rains at harvest time have further stressed supply.
The effects of these supply chain issues are already being felt across the industry. Coffee sellers have been forced to increase prices and abandon discounts in order to maintain their profit margins.
In response to higher bean prices, Nestlé, the world’s largest coffee company, announced price hikes and plans to reduce packaging sizes.
As of now, Arabica coffee futures in New York have risen for six consecutive days, reaching $3.1715 per pound.
Additionally, the rising costs of hedging, or insuring against price fluctuations, have contributed to increased prices due to stricter requirements for producers.
These developments follow a broader trend of rising commodity prices. For instance, cocoa prices have also experienced an uptick, with New York futures increasing by 3.5% to $9,282 per ton as of November 26.
As these price hikes continue, analysts warn that consumers may soon feel the effects at the checkout, as higher costs are passed down the supply chain.
