Coffee Prices Skyrocket: Climate Crisis and Supply Woes Fuel Soaring Costs

Coffee prices are expected to continue their upward trajectory, driven by a combination of factors including climate change impacts, disruptions in supply chains, and new regulatory requirements within the EU, according to Giuseppe Lavazza, chairman of Italian coffee giant Lavazza.

Lavazza emphasized that consumers should not anticipate a decline in coffee prices any time soon, noting that the entire coffee supply chain is facing considerable strain. This pressure has compelled coffee roasting companies to increase retail prices and adjust their profit margins upward due to higher costs of raw materials, primarily caused by diminished supply linked to climate-related challenges.

Arabica coffee futures recently traded above 2.40 USD per pound and approached a peak of 2.50 USD per pound seen in April, largely owing to reduced coffee exports from Vietnam stemming from adverse weather conditions. Vietnam, a major coffee producer, reported a 10.6% decrease in coffee exports in the first half of the year compared to the same period in the previous year, totaling 902 thousand tons, as per official statistics.

Global coffee prices experienced a significant surge in the second quarter, primarily due to severe heatwaves affecting key coffee-growing regions in Asia. By the end of June, London futures for Robusta had risen by 18.1% from the end of March, while Arabica futures increased by 20.6%, reflecting the market's response to supply challenges exacerbated by weather-related disruptions.