Global beverage prices saw a sharp rebound in December, with cocoa and coffee prices experiencing significant increases, driven by renewed supply concerns and adverse weather conditions in key growing regions. The World Bank’s beverage price index jumped by nearly 20% last month, following notable price hikes in both commodities. This uptick follows a period of decline earlier in 2024, yet the index remains substantially higher compared to the previous year.

Coffee prices witnessed a remarkable surge. Arabica coffee saw a substantial month-on-month rise, maintaining a trend of elevated prices throughout the year. Robusta prices also climbed, continuing the upward trajectory that has seen prices more than double over the past year. While global coffee production reached a record in the 2023-24 season, forecasts for the upcoming season predict only a modest increase, still below the levels seen in 2020-21. Brazil, a major producer of Arabica beans, is facing significant production shortfalls, further stoking concerns about supply. Although favourable weather conditions in East Asia have provided some relief for Robusta prices, Arabica remains vulnerable to ongoing challenges. Prices for both varieties are expected to moderate in the next couple of years, though fluctuations remain a constant in a market highly sensitive to global supply risks.

Similarly, cocoa prices experienced a notable jump, reaching their highest levels in recent months. This surge is largely attributed to a combination of poor weather in West Africa, particularly in Côte d’Ivoire and Ghana, the world’s largest cocoa producers, and robust seasonal demand. These countries, which together account for a substantial portion of global cocoa output, have seen a decline in production. The global supply of cocoa dropped significantly in the 2023-24 season, further tightening the market. However, weather conditions are expected to improve in key growing regions, particularly in Côte d’Ivoire, where favourable conditions could boost output in the coming season. Despite the expected recovery, cocoa prices are likely to remain volatile, with risks of further price fluctuations if adverse weather patterns persist in the region.

In contrast, tea prices showed signs of stabilization, with a slight decline noted in the global average. The drop was particularly evident in key auctions in India and East Africa, although prices in Sri Lanka showed an uptick. Despite ongoing supply concerns in parts of East Africa, the overall tea market remains well-supplied. Prices are forecast to stay relatively stable over the next few years, with only modest adjustments anticipated.

The beverage market faces a period of uncertainty, with factors like weather, global demand, and regional supply disruptions continuing to influence prices. While some commodities like coffee and cocoa may see price relief soon, the volatility in their markets highlights the ongoing challenges faced by producers and consumers alike.