Arabica Coffee Futures Hit 2-Year High Amid Drought Concerns

The price of coffee futures just spiked to a level not seen in two years — and it’s not due to increased demand, but to weather worries in the world’s top coffee-growing country. If you’ve been tracking your morning brew’s cost or follow commodity markets, you’ll want to know what’s behind this sudden rise.

Arabica coffee futures hit a two-year high of $2.0890 per pound on March 11, closing at $2.0565 — up 2.25 cents or 1.1%. Robusta futures rose to a one-year high as well. The moves come amid concerns over uneven rainfall in Brazil’s key growing regions.

Why Did Arabica Futures Surge to a Two-Year Peak?

On March 11, ICE May Arabica coffee futures closed at $2.0565 per pound, marking a 1.1% increase for the day. More notably, the contract hit an intraday high of $2.0890 — the highest level since March 2022. That’s a significant move for a commodity that’s closely watched by both producers and roasters worldwide.

What’s Happening with Brazil’s Coffee Crop?

Brazil, the world’s largest coffee producer, has seen uneven rainfall patterns in its key growing areas. Some regions received much-needed rain, but others remained dry, and overall rainfall is still expected to fall short of normal levels. This inconsistency threatens crop development, especially for the Arabica variety, which is more sensitive to weather changes. In contrast, Brazil’s Robusta-growing regions have not been affected by the ongoing drought.

How Did Robusta and Other Commodities Perform?

London’s LIFFE May Robusta coffee futures also saw strong gains, rising 33 dollars (1.5%) to $2,180 per ton — the highest level in a year, with an intraday peak at $2,195. Meanwhile, cocoa futures climbed to multi-year highs. ICE May cocoa rose 22 dollars (0.7%) to $3,006 per ton, touching $3,027 — the highest since September 2011. Liffe May cocoa gained 18 pence (1%) to £1,878. Sugar, however, moved in the opposite direction, with ICE May raw sugar falling 0.19 cents (1%) to 18.03 cents per pound, and Liffe May white sugar down 7.10 dollars (1.5%) to $471.00 per ton.

What Drives Coffee Futures Prices?

Coffee futures are influenced by a mix of supply expectations, weather conditions, and technical trading factors. In this case, the fear of lower Arabica yields due to irregular rainfall in Brazil — the top global supplier — pushed prices upward. Technical buying, such as the presence of stop-loss orders above $3,000 per ton in cocoa, also contributed to sharper moves in related markets.

Frequently Asked Questions

What price did ICE May Arabica coffee futures hit on March 11?

ICE May Arabica coffee futures hit an intraday high of $2.0890 per pound on March 11, the highest level in two years. They closed at $2.0565, up 2.25 cents or 1.1% for the day.

Why are Arabica coffee prices rising?

Arabica coffee prices are rising due to concerns over insufficient and uneven rainfall in Brazil’s major Arabica-growing regions, which could negatively affect the crop yield. Some areas have had drought, while others saw late rain.

Did Robusta coffee also see price increases?

Yes, Robusta coffee futures rose to a one-year high. LIFFE May Robusta closed at $2,180 per ton, up 33 dollars or 1.5%, with an intraday peak of $2,195.

How did cocoa and sugar futures perform?

ICE May cocoa futures rose to a three-and-a-half-year high of $3,006 per ton, hitting $3,027 intraday — the highest since September 2011. But ICE May raw sugar fell 1% to 18.03 cents per pound, and Liffe May white sugar dropped 1.5% to $471.00 per ton.

What does this mean for coffee drinkers?

Higher futures prices can eventually lead to increased retail prices for coffee, especially for specialty grades sourced from affected regions like Brazil. However, the impact may take months to filter down to consumers.

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