Climate Concerns Drive Coffee Prices Up and Impact Future Production

The coffee market faces growing concerns about future productivity, driving up coffee prices. The significant price hikes, fueled by climate concerns, reflect fears that coffee production will be negatively affected. Experts indicate that the 2025 crop may suffer a potential 20% decline, largely due to adverse weather conditions. In Vietnam, the largest producer of robusta, estimates suggest a 10% to 15% production drop, caused by extreme weather and reduced land available for cultivation.

Future coffee prices for arabica and robusta saw sharp increases on Monday (23). Arabica rose by 1,290 points in the December 2024 contract, closing at 263.65 cents/lbp, while robusta saw a rise of $217 per ton in the November 2024 contract. The lack of rain in Brazil, crucial during the flowering stage, has already caused damage to crops, and although expected rains may slow the damage, they will not recover what has been lost. This unfavorable global climate scenario has led to market volatility, with frequent price surges.

In the Brazilian domestic market, prices are also climbing as producers hedge to protect their crops from potential losses. Arabica Type 6 experienced a significant 4.29% increase in Guaxupé/MG, and the Cherry Coffee recorded a 3.99% rise in the same region. This trend of price appreciation reflects uncertainties surrounding future supply, reinforcing the need for preventive measures by producers to minimize the impact of adverse weather conditions on future harvests.

Source: Notícias Agrícolas