Supply is tight! Arabica coffee bean prices hit a record high, cocoa reaches a seven-month high

Coffee beans and cocoa are running low again! On Tuesday, December 10, New York Arabica coffee futures rose nearly 5%, reaching the highest level since 1972, mainly due to market concerns about a global coffee bean supply shortage. Marex Group analyst Steve Pollard stated in an interview with Bloomberg: "Concerns about Brazil's Arabica coffee production for the 2025-2026 season have intensified this week." Recently, major agricultural trader Volcafe has lowered its forecast for Brazil's Arabica coffee production due to severe drought, predicting that South America will produce only 34.4 million bags of Arabica coffee next season, a decrease of 11 million bags from the forecast made in September last year. Furthermore, Volcafe also predicts a global coffee production shortfall of 8.5 million bags for the 2025-2026 season, marking the fifth consecutive year of supply gaps. Sucden Financial researcher Viktoria Kuszak stated: "We are currently in a strong fundamental phase of the coffee market, and this phase is expected to keep coffee prices high." The cocoa market is also facing supply shortages, with the most active cocoa contracts in New York rising 58% to $10,500 per ton, reaching the highest level in seven months. Analysts believe that the main reason for the rise in cocoa prices is the adverse weather conditions in major producing countries such as Ivory Coast and Ghana. Steve Wateridge, head of research at TRS by Expana, stated: "The outlook for mid-crop has worsened in recent weeks, and the weather conditions over the next three months will determine whether it will deteriorate further." Additionally, according to the Food Price Index from the Food and Agriculture Organization (FAO) of the United Nations, prices for multiple categories in the global trade food basket have been accelerating this year—despite the U.S. government stating that inflation is slowing, food inflation remains very "stubborn" with no significant easing.