Coffee prices are at 10-year highs, and analysts say they have much further to go

• Alongside bad weather, global supply constraints have had a substantial impact on the coffee market.
• Uncertainty is also stemming from exporting countries such as Ethiopia, which is on the brink of a civil war, and Vietnam, which is seeing a rise in Covid-19 cases that could hit production.  

Coffee prices have reached a 10-year high, and analysts expect tightness in the market to continue all the way into 2023.

Coffee contracts for December delivery ended Monday’s trading session at $2.34 per pound. On Thursday, coffee futures on New York’s Intercontinental Exchange reached $2.46, marking the highest price since 2011, when the commodity broke above $3 per pound.

Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC that over the past 12 months, “a perfect storm of events [has been] conspiring to give our beloved bean a boost.”

“The question for future price action is how much of these developments are potentially longer-lasting,” he said in a phone call. “I think we need to focus on what’s been unfolding in Brazil this year, where we’ve had a generational low in temperatures, a very quick spell of frost which hit some of the growing areas, and we’ve had a period of drought – this has left the 2022 crop in a bit of a precarious state.”