Coffee Prices Retreat After Hitting 47-Year Highs Amid Tight Supplies

Coffee prices eased on Friday after earlier surging to their highest levels in nearly five decades, driven by tightening supplies as Brazil, the world’s top producer, grapples with the fallout from this year’s drought and a slow recovery for next year’s crop.

Arabica coffee futures on ICE settled down 1.5% at $3.1805 per pound after touching $3.3545, the highest since 1977. Robusta coffee futures peaked at $5,694 per metric ton, their highest in 47 years, before sliding 2.7% to end the session at $5,377.

Supply constraints have pushed arabica prices up by 71% this year, cementing its position among the top-performing commodities alongside cocoa, which has more than doubled in value in 2024.

Farmer Delays Worsen Tightness
Dealers noted that some Brazilian farmers have delayed delivering this year’s crop, anticipating even higher prices. The strategy has led to short-term shortages, dealing heavy financial losses to traders reliant on those shipments.

The delays have intensified pressure on coffee traders, with Brazilian firms Atlantica and Cafebras announcing plans to negotiate with creditors in court. Both companies cited the non-receipt of 900,000 60kg bags of coffee contracted from farmers.

Parallels with Cocoa
"The price trend is now very similar to cocoa earlier this year, with comparable drivers,” Commerzbank said in a note. Poor harvests in Brazil, like the drought-hit cocoa crops in Ivory Coast and Ghana, have underscored vulnerabilities in key agricultural markets.

New York cocoa futures rose 3.9% on Friday to settle at $9,425 per ton after reaching a five-month high of $9,520, as supply concerns continue to roil the market.

Outlook
The coffee market remains highly volatile, with supply challenges showing no immediate signs of resolution. Producers and traders are bracing for sustained tightness as Brazil’s recovery remains uncertain, keeping upward pressure on prices in the months ahead.