Unprecedented Surge in Coffee Prices

On Friday, the coffee market witnessed an unprecedented surge, with prices reaching an all-time high. This dramatic increase is attributed to a confluence of factors affecting the global coffee supply chain.

Impact of Climate and Geopolitical Factors

Arabica beans, predominantly cultivated in Brazil, Colombia, Ethiopia, India, and Guatemala, are at the heart of this price surge. Brazil's coffee production has been severely impacted by unexpected frosts and droughts, disrupting the supply. Meanwhile, geopolitical tensions in Colombia have added a layer of uncertainty to the market.

Rising Costs and Trade Uncertainties

Further exacerbating the situation are the rising production costs, including transportation and labor. The US government's use of tariffs as a negotiation tool with key coffee-producing nations has also contributed to the escalating trade uncertainties, putting additional pressure on coffee prices.

As a result, coffee futures for March saw a significant increase, climbing 2.40% on Friday to sell at $4.13 per pound.