Coffee futures hit 47-year high on global supply and EU law fears

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Coffee climbed to its highest in nearly 50 years on Wednesday as concerns over a global supply shortage added to market uncertainty over the impact of incoming EU laws on deforestation.

Futures tracking higher-quality arabica beans rose 4.7 per cent to $3.23 a pound in New York, their highest levels since 1977, to extend the rally in prices this year to more than 70 per cent.

London futures for cheaper robusta beans, used in instant coffee, rose 7.7 per cent to reach $5,507 a tonne, nearly double their price at the start of the year.

Traders said the move had been driven by coffee roasters, commercial buyers who process beans for consumption, aiming to secure supplies ahead of likely shortages and uncertainty over the status of a new EU law that bans using deforested land for crops.

“I have never seen anything like this before,” said Tomas Araujo, trading associate at brokerage StoneX. “This is not going to be resolved this year and that’s why the roaster has started going into panic mode.”

Hot and dry weather in Brazil has stoked concerns that output from the world’s biggest arabica producer will fall next season, reducing tight global supplies. The country suffered its worst drought in 70 years in August and September, followed by heavy rains in October, leading to concern the flowering crop will wither.

This follows three consecutive years of supply deficit for robusta beans, as a result of poor weather in Vietnam, the biggest robusta-producing country. Brazil’s 2025-2026 arabica harvest looks set to fall short, just when the industry was banking on it to put the market into a supply and demand surplus, Araujo added.

The rush to secure raw material has been exacerbated by European importers buying up beans earlier than usual this year, as they grapple with uncertainty over new EU legislation which requires them to prove the coffee they import into the bloc was not grown on deforested land.

EU authorities are due to apply a 12-month delay to the legislation, which comes into effect at the start of the new year. However, lawmakers in the bloc have also proposed amendments to the law, but are opposed by member states. An agreement is not likely until mid December. Traders are concerned the delay may not be approved, or would come late to be recorded in law by the end of the year.

With European roasters rushing to build their inventories for next year, “US roasters have come into the market too to make sure they do not get priced out,” Araujo said.

US roasters are also responding to president-elect Donald Trump’s promise to impose import tariffs on a range of goods once he takes office in January, said Carlos Mera, head of agricultural commodities at Rabobank.

“If you are a roaster and you believe that there will be tariffs on coffee, you will try to import now, because otherwise you will be paying tariffs later,” said Mera, adding that about 23 per cent of global exports go to the US.

Consumers, already facing higher coffee prices, should expect to see further increases, Mera said. “The increase in prices we’ve seen recently are not because of the latest rally, but the last one,” he said, referring to the surge in robusta prices earlier this year. “So there is still much more pain coming for consumers.”