Coffee prices hover around record highs after extreme weather in key growing regions
El Nino conditions are known to contribute to drought conditions in Central and South America. Coffee trees prefer cooler tropical climates with high humidity values, which are more common during La Nina events.
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Coffee bean prices around the globe continue to hover around record highs as extreme weather in major production regions and an increase in demand cause increased pressure on the market.
Growers in Brazil, Vietnam and Colombia, who make up around 70% of production, have faced extremes linked to the El Niño climate pattern, which had significant impacts on the first half of 2024.
Drought conditions worsened growing environments for coffee producers, which tend to thrive in cooler tropical climates with higher humidity.
The predominant coffee crop grown in South America is Arabica, which is lauded for its sweet and less earthy flavor.
The U.S. International Trade Commission estimates that 60% to 70% of the coffee produced in South America is Arabica, which is popular with consumers in the United States.
MIAMI, FL - SEPTEMBER 29: An espresso coffee is seen at Eternity Coffee Roasters during National Coffee Day on September 29, 2014 in Miami, Florida. The day is for coffee drinkers to celebrate and enjoy the popular beverage which 50% of the population, equivalent to 150 million Americans, drink espresso, cappuccino, latte, or iced/cold coffees.
(Joe Raedle/Getty Images / Getty Images)
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Coffee is the most popular drink in the U.S. and is one of the world's most traded commodities, according to the National Coffee Association.
"NCA’s exclusive research has tracked coffee trends for more than 70 years, and America’s favorite beverage has only ever continued to grow in terms of overall popularity and in innovating to meet consumers’ evolving tastes. This year’s two-decade high is only the latest proof of America’s enduring love affair with coffee," William Murray, president and CEO of the NCA, said earlier this year.
The U.S. is one of the world’s leading importers of the commodity, with around 80% originating in Latin America, according to the U.S. Department of Agriculture.
The agency pinned increased prices on inadequate farming practices in Colombia and drought conditions in Brazil, which have adversely affected production.
World drought monitor: 3-month SPI from the European Centre for Medium-Range Weather Forecasts
(Drought.gov / FOX Weather)
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For its part, Starbucks, the world's largest coffee chain, says it helps provide farmers with trees that are more adaptable and lead to higher productivity.
"Since making the commitment to distribute 100 million coffee trees by 2025, Starbucks has now distributed more than 80 million of the next generation of climate-resistant coffee trees in El Salvador, Guatemala, and Mexico. Additionally, in Colombia, we provide coffee seedlings to farmers and have delivered more than 53 million seedlings as of FY23," the company stated.
Historically, growing regions of the globe have seen lower production values during El Niño events, which tend to cause extreme weather conditions.
The world exited the significant El Niño during the summer, which might provide some relief from drought as neutral and La Niña conditions of the El Niño Southern Oscillation take over global patterns.