Bitter Rise in Coffee Prices: Are We Facing Another Wave of High Prices in Cafes?
Date: July 7, 2026
Current Coffee Market Overview
One year ago, coffee prices had dipped below 300 cents per pound, leading to discussions about a potential end to high prices in the coffee market. However, despite high retail prices, the outlook seemed optimistic. In October, prices peaked near 440 cents per pound but fell to 250 cents per pound by late May and early June due to expectations of record harvests in Brazil. Recently, however, weather conditions have shifted dramatically, pushing coffee prices back up to 350 cents per pound, marking a significant increase of over 15% in a single day—the largest daily rise since 2000.
Weather Impact and "Super El Niño"
The unpredictable weather has been a major factor influencing coffee prices. In Brazil's Minas Gerais region, which is crucial for Arabica coffee production, rainfall in June was nearly 2000% above historical norms, severely affecting bean quality and delaying harvests. Following this, a complete lack of rainfall in early July further complicated the situation. The emergence of the "Super El Niño" phenomenon is expected to exacerbate these conditions, with meteorologists predicting a 67% chance of its occurrence, which could negatively impact coffee production.
Market Reactions
As a result of the changing weather conditions, investment funds have begun to cover short positions, leading to a significant spike in coffee prices. On July 6, September Arabica contracts experienced a nearly 18% increase, while Robusta prices also rose by 8%, surpassing 4100 USD per ton. The El Niño phenomenon is expected to have mixed effects on Brazilian coffee but is likely to lead to reduced Robusta production in Southeast Asia due to severe droughts.
Production Costs and Supply Issues
Market fundamentals indicate that consumers may not be able to rely on distributors and cafe owners to absorb rising costs. Certified Arabica stocks have fallen to their lowest levels in over two years, indicating a physical goods shortage. In Vietnam, Robusta farmers are facing early droughts and rising costs, with fertilizer and fuel prices increasing by 30% and labor costs by 33% year-on-year. Historical data suggests that August is typically a strong month for coffee prices, and this trend may continue into the end of the year.
Broader Implications for Commodity Prices
The rise in coffee prices is not an isolated incident; other soft commodities are also experiencing price increases. Cocoa prices, which had previously dropped significantly, surged by 13-14% on July 6, reaching a six-month peak due to excessive rains in West Africa that disrupted transport and caused tree diseases. This suggests that consumers should prepare for a broader increase in prices across various commodities.
Conclusion
In summary, the combination of unpredictable weather patterns, rising production costs, and dwindling stocks indicates that consumers may soon face significantly higher prices for coffee and other commodities. The anticipated return of high prices could make daily coffee consumption a luxury for many in the coming months.