Coffee could get a latte more expensive

Bad news for everyone who counts caffeine as the only thing that gets you out of bed in the morning: The price of some strains of coffee beans hit a two-year high on Tuesday.

Arabica coffee futures are up roughly 30% year to date due to supply chain shortages, while robusta coffee futures, a cheaper alternative, are up 65% over the past 12 months.

What’s driving the price spike? Weather disruptions, such as poor rainfall in countries that grow the majority of coffee beans—mainly Vietnam and Brazil—has led to the widespread death of coffee plants and smaller harvests.

This is all happening at the same time as a rise in international demand for coffee in markets like China, and roasters are increasingly looking toward the cheaper robusta bean variety to cut costs.

And the shortage will likely keep driving prices higher into 2025, according to Bloomberg. Some roasters are paying over $1,000 higher than futures prices for beans grown in Vietnam. Giuseppe Lavazza, the chief executive at coffee roaster Lavazza, said in an interview with Bloomberg that he’s, “Never seen something like that in the history of our industry.”

A number of agricultural commodities have had their supply chains disrupted due to climate change this year. Earlier this year, cocoa prices were also on a tear due to supply chain disruptions, and US cocoa futures are overall up about 150% over the past year.

And cocoa won’t be the last commodity to feel the squeeze. Research from accounting firm PricewaterhouseCoopers pointed to nine key commodities that will continue to face climate change-driven heat stress, including agricultural products like wheat, as well as precious metals such as lithium and aluminum.

While there used to be pure-play coffee exchange traded products, two of them, JO and CAFE, liquidated in past years. So for investors not steeped in the commodities trade, these latest gains can be hard to get.—LB