Coffee prices have hit a new record high: here are the reasons behind this surge.

The price of Arabica coffee has surpassed $3.6 per pound, marking a record level, according to Reuters.

The primary reason for the price increase is the shortage of beans in Brazil.

According to traders, 70-80% of the current harvest has already been sold, and new deals are being made slowly. Despite improved weather conditions following the drought, the next Arabica harvest in Brazil is expected to be 4.4% smaller, as per forecasts from Conab.

Supply constraints are not only observed in Brazil: Vietnam has slowed its Robusta exports, and the Arabica harvest from Central America and Colombia is arriving on the market with delays.

Meanwhile, the price of Robusta coffee has risen by 0.9% to $5609 per ton. It is anticipated that coffee exports from India – the fifth largest producer of Robusta – will decrease by more than 10% by 2025 due to reduced production and dwindling stocks.