19/01/2025
A Year in Coffee: 2024 Review;
The Coffee Market started 2024 trading at 177 c/lb and little did we know that it would hit record highs in the run up to Christmas. The coffee market hit 348.35 c/lb on the 9th of December, a whopping increase of 171.50 c/lb! The year would not close 96.5% up, but it did finish at 319.75 c/lb, representing a 80% increase from the start of 2024 till the end.
Arabica (January - December 2024)
What triggered this almighty bull run that we still find ourselves in? Has it run out of steam or is there more momentum behind it still?
There is a simple supply and demand story here whereby some of the key producing origins simply have not produced enough coffee or are predicted to supply less than originally expected. Countries like Honduras and Peru this year are reported to have produced around 15% less than the previous year and the next Brazilian crop in summer 2025 is reported to be not as big as everyone had originally hoped for (and needed). The role of expectations is key in any market and coffee is no different. The most important figure for Arabica is the Brazilian harvest, which occurs in the European summer and predictions for the 2025 harvest have been under what the market needs in terms of volume. This started in earnest early Autumn when initial data from the fields pointed to a lower upcoming crop. In early December Volcafe cut its crop estimate by 11 million bags which revealed the severity of an extended drought in the world’s largest Arabica producer.
Volcafe see Brazil producing just 34.4 million bags of Arabica. That puts global coffee production on track to fall short of demand by 8.5 million bags in the 2025-26 season if their predictions come true, which would mark an unprecedented fifth year of deficits.
Let’s not forget Robusta either though, Vietnam’s 2022/23 harvest was lower than expected and we can only hope that the crop predictions for the current crop are correct and that we eventually land at a figure larger than 28 million bags.
Nobody knows what the future holds but what we can say is that 2024 brought us historic highs in the New York Coffee market and US Dollar Strength.
