On Wednesday, coffee prices advanced sharply following supply challenges in Brazil and Vietnam, underpinning the recent rally.
US coffee futures for March delivery expanded by 0.52% to $2.95 per pound on November 20’s Asian afternoon session. At the same time, the arabica variety is surging to a 13-year nearest-futures high.
Based on reports, Brazil is currently experiencing extreme drought conditions. This phenomenon raised concerns about longer-term crop damage, which supported the cost of the bean.
In line with this, shower activities in the country remained under the average since April. Correspondingly, the lack of rain damaged coffee trees during a significant flowering stage.
According to the natural disaster monitoring center in Cemaden, Brazil is encountering the driest weather since 1981. For this reason, Brasilia lowered the arabica crop prospect for the 2025/26 season, suggesting uncertainty.
On the other hand, Vietnam’s coffee exports for October dropped by -11.60% month-over-month (MoM) to 45,412.00 metric tons (MT). As revealed by the General Department of Customs, prices are also underpinned by tight robusta supplies.
Additionally, the world’s biggest producer of the variety is concerned about heavy rains that will flood crop fields and delay harvest.
In connection, ICE-monitored robusta coffee inventories decreased to a 6-1/2 month low of 3,854 lots last Tuesday.
Nestle Raises Prices Over Costlier Coffee Beans
With the cost of coffee steadily climbing throughout the year, Nestle announced that it will hike its prices. Likewise, it targets reducing the size of its packaging to mitigate the effect of rising bean costs.
The food company attributed the problem to climate change in the largest producers of the ingredient in America’s favorite beverage.
As stated by Head of Coffee Brands David Rennie, Nestle will be focusing more on soluble and capsule beans. He added that the corporation is far from being immune to price volatility.
Moreover, the Switzerland-based business boosted prices twice since 2022, while highlighting its diverse product portfolio edge.
