Coffee Price Surges to Highest on Record

What is a bane for the drinker is a boon for the farmer, especially in Uganda where coffee has been a ripe subject of political discourse over the past few months.

Coffee drinkers may soon see their morning treat get more expensive, as the price of coffee on international commodity markets has hit its highest level on record, according to the BBC.

But what is a bane for the drinker is a boon for the farmer, especially in Uganda where coffee has been a ripe subject of political discourse over the past few months.

On Tuesday, the price for Arabica beans, which account for most global production, topped $3.44 a pound (0.45kg), having jumped more than 80% this year.

The cost of Robusta beans, meanwhile, hit a fresh high in September.

It comes as coffee traders expect crops to shrink after the world's two largest producers, Brazil and Vietnam, were hit by bad weather and the drink's popularity continues to grow.

Amidst the challenges in Brazil and Vietnam, has upped its promotion of coffee growing with Buganda Kingdom, in particular, setting the pace with its Ommwanyi Terimba initiative through which the natives are urged and tipped to stake their future on coffee berries.

The translation of the berries in cups of coffee drinkers has been immense of the economy, with the value of Uganda’s coffee exports in August soaring to 82.9% versus a year earlier helped by higher global prices, Uganda Coffee Development Authority (UCDA) said in August.

Uganda is Africa’s largest exporter of the beans which are, alongside gold, the country’s biggest sources of foreign exchange.

In August, Uganda shipped 837,915 60-kilogramme bags of coffee worth $221.6 million, according to the UCDA.

“The value of coffee exports was higher as global coffee prices continue to rise as dry conditions in Brazil and Vietnam are seen to affect coffee crop yields,” UCDA said in the report.

Uganda exported 743,517 60-kilogramme bags in August last year, worth $121.64 million.

It also earned $1.4 billion from coffee exports in the 12 months to August, up from $918.4 million last year, continuing a general upward trend in earnings in recent years, the UCDA said.

This value of coffee was underscored in the controversial merger of the UCDA under the National Coffee Bill, 2024 that was only passed after Parliament was turned into a din of chaos with fist-fights and security raids.

The controversial merger moves the UCDA under the Ministry of Agriculture, which many argue has no capacity to do what the agency has been doing as an autonomous institution.

Global trends

While in recent years major coffee roasters have been able to absorb price hikes to keep customers happy and maintain market share, it looks like that's about to change, Vinh Nguyen, the chief executive of Tuan Loc Commodities, told the BBC.

"Brands like JDE Peet (the owner of the Douwe Egberts brand), Nestlé and all that, have [previously] taken the hit from higher raw material prices to themselves," he said.

"But right now they are almost at a tipping point. A lot of them are mulling a price increase in supermarkets in [the first quarter] of 2025."

At an event for investors in November, a top Nestlé executive said the coffee industry was facing "tough times", admitting his company would have to adjust its prices and pack sizes.

"We are not immune to the price of coffee, far from it," said David Rennie, Nestlé's head of coffee brands.

The last record high for coffee was set in 1977 after unusual snowfall devastated plantations in Brazil.

"Concerns over the 2025 crop in Brazil are the main driver," said Ole Hansen, head of commodity strategy at Saxo Bank.

"The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail."

It is not just Brazilian coffee plantations, which mostly produce Arabica beans, that have been hurt by bad weather.

Robusta supplies are also set to shrink after plantations in Vietnam, the largest producer of that variety, also faced both drought and heavy rainfall.

Coffee is the world's second most traded commodity by volume, after crude oil, and its popularity is increasing. Consumption in China has more than doubled in the last decade.

"Demand for the commodity remains high, while inventories held by producers and roasters are reported to be at low levels," Fernanda Okada, a coffee pricing analyst at S&P Global Commodity Insights, told the BBC.

"The upward trend in coffee prices is expected to persist for some time," she added.