The year 2024 proved to be disastrous for Brazil's coffee production, which typically accounts for approximately 40% of the global supply. Severe drought conditions shriveled flowers on coffee trees, significantly impacting the size of the beans produced. Additionally, the drought and elevated temperatures created a conducive environment for wildfires, which devastated some coffee plantations.
In mid-August, a freeze further compromised the developing coffee crop, leading to a stagnation in the 2024 harvest season. Reports indicate that Brazil's coffee exports surged, but the ongoing drought poses challenges for the 2025-26 season. Meanwhile, Vietnam, the second-largest coffee producer, also faced crop damage due to heat, drought, and typhoon activity throughout the year.
As a result of these conditions, coffee prices on the futures markets reached their highest levels in 13 years by the end of 2024, adjusted for inflation.
In the cocoa market, prices surged dramatically, opening at $4,209 per metric ton in January 2024 and soaring to $12,931 by December 18, marking the highest price in five decades. This increase is attributed to adverse weather conditions in West Africa, which produces over 70% of the world's cocoa. Heavy rainfall followed by drought affected crop yield, contributing to lower volumes at export facilities and a forecasted retail price increase of at least 10% for consumer chocolate in 2025.
Florida's orange production also suffered, exacerbated by both natural disasters and disease. Hurricane Milton caused extensive damage to citrus groves, leading the USDA to lower its production estimate for Florida's oranges by 20%. Concurrently, Brazil's drought has adversely affected orange groves, with reports indicating reduced fruit production for five consecutive seasons in key regions.
While weather-related calamities have significantly impacted soft commodity prices, other factors such as international conflicts and crop diseases also play a role. The shifting nature of tropical and subtropical weather patterns suggests a more volatile market for these essential crops as 2025 begins.