Extreme weather in 2024 significantly affected coffee, cocoa, and citrus crop production, leading to skyrocketing commodity prices and forecasts of higher consumer costs. Brazil’s drought and wildfires hurt coffee yields, cocoa prices soared due to adverse weather in West Africa, and hurricanes in Florida further reduced orange production.
In 2024, extreme weather conditions severely impacted the production of key soft commodities including coffee, cocoa, and citrus crops. Brazil, a primary producer of coffee, faced drought and record heat, leading to diminished yields and crop quality. Concurrently, cocoa prices soared to the highest level observed in 50 years due to adverse weather in West Africa, while orange juice production declined significantly following hurricane damage and ongoing agricultural diseases in Florida and Brazil. These developments suggest potential price hikes for consumers, as the agricultural market adapts to increasingly unpredictable climate patterns.
Brazil’s coffee sector, responsible for 40% of the global supply, encountered disastrous weather in 2024. A severe drought compromised the flowering phase, essential for new coffee bean production, resulting in smaller beans and a reduction in total crop output. Compounding this issue, a mid-August freeze harmed the nascent coffee harvest, leading to a forecast of virtually stagnant production levels compared to the previous year. Exports, however, surged even amidst challenges as futures prices reached their highest levels in 13 years by year-end. Vietnam’s coffee producers similarly faced challenges from drought and typhoons that further strained supply.
In the cocoa market, prices escalated dramatically, with cocoa futures beginning January 2024 at $4,209 per metric ton and soaring to an unprecedented $12,931 by mid-December. This price surge was driven primarily by erratic weather patterns in West Africa, where heavy rains and subsequent drought conditions diminished crop yields. Export volumes fell below the historical average, indicating a potential shortfall in the coming year and presaging a likely consumer price increase for chocolate products in 2025.
The orange juice market has not escaped the clutches of severe weather events and agricultural disease. While U.S. orange production has been impacted over the past decade due to citrus greening, consecutive hurricanes have exacerbated the challenges. Following Hurricane Milton’s devastating sweep through Florida’s citrus groves, the USDA downgraded projected production figures significantly. Coupled with drought conditions affecting Brazilian orchards, it indicates a protracted decline in availability and an impending rise in consumer prices, with a projected increase of at least 10% for chocolate products also on the horizon.
The volatility of soft commodity prices is not solely attributable to weather-related issues. International conflicts, crop diseases, and political instability further complicate supply dynamics. As such, the agricultural sector must navigate these evolving risks while consumers brace for higher prices, arising from a shift towards more unpredictable climatic conditions going into 2025.
The article provides insights into the effects of extreme weather on globally important agricultural products—namely coffee, cocoa, and citrus crops. These commodities, though thinly traded in markets with limited active investment, directly influence consumer prices. Understanding the significant impacts of weather variations, international trade conditions, and agricultural diseases is crucial, as they collectively shape the global economy and food supply chain.
In summary, the challenges posed by extreme weather in 2024 have resulted in diminished yields and skyrocketing prices for pivotal soft commodities such as coffee, cocoa, and orange juice. The ramifications of these climatic shifts are far-reaching, suggesting that consumers may face higher costs for everyday goods as production levels struggle to stabilize. Going forward into 2025, the importance of addressing these volatility factors will be paramount for both producers and consumers alike.
Original Source: www.dtnpf.com
