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On October 23, coffee’s commodity price reached $4.35 per pound, a record high. This comes six months after the C price peaked at $4.29 per pound in February, breaking the previous record that had stood since 1977.
Coffee prices are spiking for a lot of reasons, reports Pratik Parija and Ilena Peng for Bloomberg. Weather conditions in Brazil, the world’s largest coffee producer, continue to threaten supply, and warehoused coffee reserves are low. Sam Klein from Partners Coffee told Bloomberg that many buyers are holding off on contracting coffee due to the volatility, which means available inventory at these warehouses is in “super high demand,” he said.
Another contributing factor is the ever-changing tariff situation. President Donald Trump has imposed at least a 10% tariff on imports from nearly every United States trading partner. Goods from Brazil, the largest supplier of coffee to the U.S., face a 50% tariff. Lawmakers and industry actors have lobbied for a coffee-specific exemption.
Last week, Trump threatened to increase tariffs on Colombia—the second-largest source of coffee to the U.S.—due to an ongoing feud with Colombia’s president Gustavo Petro. The two have clashed over U.S. military strikes on fishing vessels in international waters. Although the U.S. justified the strikes as part of an anti-drug smuggling operation, experts said they are illegal under international law, while United Nations experts called them “extrajudicial executions.”
Also last week, the U.S. said it is considering tariffs of up to 100% on imports from Nicaragua. The reason for this is a report from the U.S. Trade Representative, which alleged “increasingly pervasive abuses of labor rights, as well as human rights and fundamental freedoms” in the country. As Nick Brown reports for Daily Coffee News, the U.S. is the largest importer of Nicaraguan coffee, accounting for about half the country’s total exports.
Adding to all this is the fact that the European Commission last week backtracked on its plans to delay implementation of the deforestation regulation known as the EUDR. At the same time, the Commission eased reporting requirements to make compliance simpler for small companies.
In September, legislators mulled giving companies another year to prepare for the law, which aims to reduce deforestation-linked imports of products like coffee. However, they decided to move forward with their proposed deadlines. The legislation will take effect for large companies on December 30 of this year, and the same time next year for smaller companies.
Read more from Bloomberg about why coffee prices keep skyrocketing here or via NDTV here.
