As the calendar turns to 2025, consumers and investors alike should prepare for turbulence across commodity markets, with coffee, oil, and other staples poised for significant shifts driven by geopolitics and weather disruptions.

Coffee: A Brewing Storm

The global coffee market faces a potential crisis, as Brazil and Vietnam, the top producers of Arabica and Robusta beans, grapple with crop shortfalls. This marks the fifth consecutive year of a production deficit, pushing Arabica prices to unprecedented heights. In late 2024, Arabica surpassed its previous nominal peak from 1977, reaching a staggering 350 US cents per pound.

Experts predict that if Brazil’s harvest doesn’t recover, prices could soar further to 400 or even 500 US cents per pound. Retailers, unable to absorb such costs, are likely to hike prices for espresso and other Arabica-based products. Colombia, meanwhile, celebrated a record domestic coffee price of $600 per 125-kilo bag in 2024, underscoring the strain on global supply chains.

Oil: The OPEC+ Conundrum

The oil market is equally precarious. OPEC+ faces mounting challenges, with global demand growth expected to hover at around one million barrels per day—significantly outpaced by non-OPEC+ production increases. Former U.S. President Donald Trump’s return to the White House could reshape the energy landscape. His potential crackdown on Iranian and Venezuelan oil exports might give Saudi Arabia an opportunity to boost production. However, his threats of trade wars and relaxed drilling regulations could also destabilize the market.

At $70 per barrel, Brent crude remains volatile, far from the $100 highs of recent years. British oil giant BP exemplifies the sector’s struggles, with its market value plummeting from $250 billion two decades ago to just $75 billion today. Analysts anticipate strategic shifts and potential mergers, with Shell emerging as a likely contender for consolidation.

Cocoa and Other Commodities: Sweet Turns Bitter

Chocolate lovers should brace for sticker shock. West Africa, responsible for 70% of global cocoa production, has faced disappointing crop recoveries, pushing cocoa prices to record levels. Similarly, coal defies predictions of its demise. Despite climate pledges, global coal consumption hit an all-time high in 2024, driven largely by China’s reliance on it as a cornerstone of its energy strategy.

Iron Ore: A Turning Point

In the metals market, iron ore presents a contrasting narrative. Prices have dropped to $100 per metric ton, a far cry from the $200 levels of 2021. With China’s steel production potentially plateauing and new supply from Guinea entering the market, the stage is set for a surplus in 2025, signaling lower prices ahead.

Navigating Uncertainty

Commodity markets in 2025 will be shaped by an intricate interplay of geopolitics, climate events, and shifting supply-demand dynamics. From soaring coffee and cocoa prices to the unpredictable trajectory of oil and coal, the new year promises a bumpy ride for traders, businesses, and consumers alike. Whether it’s your morning espresso or the energy powering your home, brace for an era of uncertainty and volatility.

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