Drought and Trump Trade Concerns... Coffee Bean Prices Reach Highest in 47 Years

Coffee Bean Prices Hit Highest in 47 Years
Cacao Prices Surge 90% This Year
Surpass $9,000 for the First Time Ever

The price of Arabica coffee beans has surged to its highest level since 1977. This is due to a record drought continuing in Brazil, the world's largest coffee producer, combined with concerns over the trade policies of the second Trump administration and the European Union (EU) forestry regulations, which have led to hoarding of coffee beans.

Coffee bean prices have surged to their highest level since 1977. Pixabay

On the 27th (local time), the March delivery futures price for Arabica beans on the ICE Futures Exchange soared to $3.20 per pound. This is the highest level since 1977, when it was $3.38. The price of Arabica beans has risen about 70% so far this year.

Not only premium Arabica beans but also relatively cheaper Robusta beans have jumped significantly. On the London Exchange, Robusta beans are trading at $5,200 per ton, up 80% since the beginning of the year.

The sharp rise in coffee bean prices is largely due to the impact of climate change. In Brazil, which mainly produces Arabica beans, the worst drought in 70 years occurred in August and September this year, followed by heavy rains last month, raising concerns about next year’s coffee harvest. In Vietnam, where Robusta beans are cultivated, dry weather during the growing season and heavy rains during the harvest season have added to supply concerns.

Kakao's price surpassed $9,000 for the first time ever on the 22nd and has risen 90% this year. Getty Images

Bloomberg reported that the possibility of tariffs imposed by the second Trump administration led importers to aggressively stockpile beans, further fueling the price increase. The United States is a major coffee consumer, importing about 20% of the world’s coffee beans.

Additionally, in Europe, the EU’s regulation banning the sale of products made from agricultural goods produced in deforested areas starting next year has caused coffee bean imports to surge compared to previous years.

There are expectations that "Coffeeflation" (a blend of coffee and inflation) will continue. Nestl?, the world’s largest coffee producer, recently stated that due to rising bean prices, it will need to raise coffee prices and reduce packaging sizes in the future.

Cocoa prices have also surged this year. The US cocoa futures price closed at $9,146 per ton on the day. Cocoa prices surpassed $9,000 for the first time ever on the 22nd and have risen 90% so far this year.