Brazil's drought may exacerbate supply shortages, pushing Arabica coffee bean prices close to historic highs.

Due to concerns about the possible occurrence of La Nia and the ongoing drought in the major coffee-producing country of Brazil, coffee futures prices have surpassed $4 per pound. The price of Arabica coffee beans rose by 0.8% on Tuesday, reaching $4.21 per pound, not far from the historical high of $4.2995 per pound set in February of this year. Since early August, driven by the drought in Brazil, the imposition of tariffs by the United States on South American supplies, and reduced inventories, coffee futures prices have risen by about 50%. Hedgepoint Global Markets analyst Laleska Moda stated, "We are seeing speculative buying, especially after the release of Brazil's August export data and the continued decline in certified Arabica coffee stocks. Shipments from Brazil to most destinations are generally decreasing, but we see that shipments to the United States have decreased even more due to tariffs." It is reported that Brazil typically accounts for about 30% of the total imported coffee beans in the United States. The inventory of Arabica coffee beans in exchange-regulated warehouses has reached the lowest level since April 2024, highlighting the tight supply. Laleska Moda stated that the National Oceanic and Atmospheric Administration (NOAA) in the United States has indicated a 71% probability of La Nia occurring from October to December, which could harm Brazil's coffee crops in 2026-2027, a season many had hoped would help replenish stocks. Weather forecasting agency Vaisala stated on Monday that the main coffee-producing regions in Brazil will continue to experience drought this week, with unfavorable soil moisture and limited rainfall hindering flowering.