Unprecedented Surge in Coffee Prices

This Friday marked a historic moment for the coffee market as prices soared to an all-time high. The surge is attributed to a complex mix of factors affecting the supply chain of Arabica beans, primarily cultivated in Brazil, Colombia, Ethiopia, India, and Guatemala.

Root Causes of the Price Hike

In Brazil, the largest producer of Arabica coffee, unexpected frosts and droughts have severely disrupted the supply. Meanwhile, geopolitical tensions in Colombia have introduced a layer of uncertainty into the market. Rising production costs, including those for transportation and labor, further exacerbate the situation. The US government's use of tariffs as a negotiation tool with key coffee-producing nations has also added to the trade uncertainties, pushing prices even higher.

Market Reaction

As a result of these factors, coffee futures for March experienced a significant climb, increasing by 2.40% to sell at $4.13 per pound by 1:19 pm ET on Friday.