Global coffee and cocoa prices have soared to record levels, driven by severe supply disruptions and adverse weather conditions in key producing regions, according to the latest Papua New Guinea Westpac Wallis, February 2025 Report. Coffee prices jumped 94% over the past year, with a 13.6% increase in the last month alone. Meanwhile, cocoa prices are 133% higher compared to the same period last year due to declining global stockpiles and persistent production challenges.
Coffee markets worldwide are feeling the impact of a supply shortage, particularly due to below-average rainfall in Brazil, the world’s largest coffee producer. Ongoing drought conditions from last year have reduced production, leading traders to anticipate a continued supply crunch in 2025.
Arabica coffee futures have climbed to $3.45 per pound and could rise further in the medium term. The situation is further aggravated by the appreciation of the Brazilian real, which strengthened by 4.5% over the past month. This has made Brazilian coffee more expensive, pushing global buyers to look for alternative sources.
For PNG, coffee is a key export commodity, and the price rally should theoretically benefit local farmers and exporters. However, this has not translated into increased export revenue. In September 2024, PNG’s coffee exports dropped by 47% to 9,300 tonnes, while the value of exports declined by 42% over the year and 31% in the September quarter as PNG coffee producers face local production challenges.
Cocoa Prices Hit Record Highs
According to the report, cocoa prices have surged due to supply chain disruptions and worsening weather conditions in West Africa, the world’s top cocoa-producer. Côte d'Ivoire and Ghana, which together account for 60% of global cocoa supply have faced droughts and poor weather conditions causing production declines.
As a result, global cocoa stockpiles fell to 1.04 million metric tons in the 2023 and 2024 season, a sharp 36% year-on-year drop. Strong demand for cocoa has further driven up prices, with buyers scrambling to secure supply.
PNG’s cocoa export receipts increased in 2024, largely due to higher price per unit, benefiting local farmers and exporters. However, Westpac expects globl supply constraints to ease later in the year, as favorable weather conditions in major cocoa-growing regions lead to a rebound in production and a potential price correction.
The sharp rise in coffee and cocoa prices presents both challenges and opportunities for PNG’s export sector. While higher prices boost farmers' incomes, the decline in export volumes, particularly for coffee, highlights underlying domestic production issues that need to be addressed.
Market and economic analysts will be closely monitoring global production trends, weather conditions, and currency movements to assess the long-term sustainability of these record-high prices.
Based on the report and data presented, for PNG ensuring a consistent and competitive supply of coffee and cocoa will be critical in capitalizing on the current market conditions.
