Historic Surge in Coffee Prices

On Friday, the global coffee market witnessed an unprecedented surge in prices, setting new records. The primary driver behind this spike is the Arabica bean, predominantly cultivated in Brazil, Colombia, Ethiopia, India, and Guatemala. These regions are currently facing a perfect storm of challenges that have severely impacted supply and escalated prices.

Factors Contributing to the Price Hike

Brazil, a leading coffee producer, has been hit by unexpected frosts and droughts, significantly reducing its output. Meanwhile, geopolitical tensions in Colombia have introduced further uncertainty into the market. Additionally, the rising costs of production, including transportation and labor, have compounded the issue, pushing prices even higher.

Moreover, the US government's use of tariffs as a negotiation tool has added another layer of complexity, threatening key coffee-producing nations and further destabilizing trade relations. This multifaceted crisis has led to a sharp increase in coffee futures, with March contracts climbing 2.40% to $4.13 per pound by early Friday afternoon ET.