[Christian Harris]

Coffee is currently experiencing a ‘perfect price storm,’ with prices escalating to unprecedented levels due to several converging factors.

Climate and weather patterns, especially droughts in Brazil and excessive rainfall in Vietnam, have significantly diminished coffee production.

Supply chain disruptions, including elevated fuel costs, labour shortages, and interruptions to shipping routes, have inflated expenses across the entire coffee supply chain.

Adding to the pressure, global demand for coffee is rising, particularly in emerging markets like China and India, further straining already limited supplies.

Geopolitical tensions and regulatory changes in import/export policies have also contributed to delays and increased costs.

This situation dramatically affects traders, creating highly volatile market conditions where coffee futures have already surged over 30% this year alone, nearing record highs.

This volatility presents both potential risks and opportunities for traders.

While some analysts predict a potential price correction of 20-30% after February 2025 due to supply chain adjustments, traders must incorporate this possibility into their long-term strategies.

Chart: Trading Economics

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