Unprecedented Surge in Coffee Prices

On Friday, the coffee market witnessed an unprecedented surge, with prices reaching an all-time high. This dramatic rise is attributed to a combination of factors affecting the global supply chain, particularly for Arabica beans, which are predominantly grown in Brazil, Colombia, Ethiopia, India, and Guatemala.

Supply Disruptions in Key Producing Countries

In Brazil, the world's largest producer of Arabica coffee, unexpected frosts and severe droughts have significantly disrupted supply. Meanwhile, Colombia, another major producer, faces additional uncertainties due to ongoing geopolitical tensions. These challenges have compounded the already rising production costs, including increased expenses for transportation and labor.

Trade Uncertainties Escalate

Adding to the market's volatility, the US government's use of tariffs as a negotiation tool has further escalated trade uncertainties, threatening key coffee-producing nations. This has led to a cautious approach from investors and traders, contributing to the price hikes observed in the market.

As a result of these factors, coffee futures for March saw a 2.40% increase on Friday, reaching $4.13 per pound at 1:19 pm ET.