Why the Cost of Your Coffee Has Soared—and Isn’t Going Down Soon

By Inti Pacheco of The WSJ. Excerpts:

"Behind the jump: Extreme weather, including droughts in Brazil and Vietnam, had hit coffee crops. And even before any tariff increases, hedge-fund bets anticipating the levies were pushing commodity prices higher." (droughts cause supply to shift to the left which raises price)

"Then in July, President Trump slapped an additional 40% tariff on goods from Brazil, which produces more than a third of the world’s coffee" (tariffs also cause supply to shift to the left because sellers need to get a higher price for any quantity supplied-this is like an excise tax)

"Another reason commodity prices are surging again? The same speculative trading that contributed to price surges early last year is ramping up again." (when buyers expect higher prices in the future demand today increases which actually causes the price to rise now)

"Now, after commodity coffee prices dipped in recent months, concerns about the Iran war and stepped-up trading in coffee futures markets are driving them up again."

"Now, surging fuel and freight costs caused by the closure of the Strait of Hormuz have triggered a new round of coffee-contract purchases and rise in commodity coffee prices."

Related posts:

Coffee Market Goes Cold as Brazilian Weather Normalizes: Futures prices have plunged since August, with coffee-growing conditions bouncing back from last season’s drought and frost (2022)

The above post has a supply and demand graph that shows how the demand for coffee is very inelastic so any supply decrease means a large price increase

Can Coffee Bean Growers Be Like OPEC? (2019)

Americans Are the Ones Paying for Tariffs, Study Finds: Research contradicts President Trump’s claim that foreigners are footing the bill, and could weaken his hand in the dispute over Greenland (2026) 

This post has has a supply and demand graph that shows how and why supply decreases when there is a tax like a tariff or excise tax