What next for coffee prices?

Coffee is trading at a 47 year high: and those price increases are starting to be passed onto consumers. Brazil and Vietnam are the two largest producers of coffee. But both have been hit by bad weather. Brazil – which dominates the market for arabica and accounts for around 40% of global coffee production – has suffered from extreme drought. As a result, coffee production dropped in the 2023-2024 season by as much as 20%, according to some estimates. That prompted a rise in prices: with averaged $254 per bag in September, representing a 49% year-on-year increase. Vietnam, meanwhile, is the top producer of robusta: commonly used in instant coffee. But the country has been hit by heavy storms, and average expert prices of Vietnamese coffee in the first nine months of 2024 rose 60% to $3,896 per tonne. But that’s not all. Supply chain challenges – such as congestion in ports, container scarcity and the Red Sea crisis – have also pushed the price of coffee up. Finally, EUDR – although with implementation delayed for a year – threatens to add bureaucracy to the supply chain and lead to price increases. And demand is growing. Long valued by workers and employees – and then becoming a mass phenomenon with the advent of Starbucks and the coffee shop culture – coffee continues to find new audiences (China is now the world leader in coffee shops, as the country sees a boom in consumption). Coffee prices are not likely to see any immediate change. “We are currently in a low stock/high and volatile price environment and that is unlikely to change in the first six months of 2025,” explained Steve Wateridge, VP Analysis – soft commodities – at Expana. “We have had four consecutive years of weather damage to the Brazil crop and further damage has occurred to the 2025/26 crop. The extent of the damage is uncertain, with a wide range of forecasts for the crop amongst market analysts, and one of the key drivers of price in H1 2025 will be any confirmation from field surveys that the crop is towards the top or the bottom end of the range of forecasts.” But rising prices are far from a new issue. Prices of both arabica and robusta have been rising over the last five years, only to become more pronounced in 2024. What’s important to remember is that there won’t be a quick fix for coffee prices. On the one hand, supply and demand will even out – ‘high prices will eventually cure high prices’, says Wateridge. Furthermore, there is significant expansion in area under production in Brazil, which will continue in 2025. However, one problem is that coffee is extremely vulnerable to climate change: meaning future weather events can be expected to bring more difficulties for the industry. “With the climate in Brazil changing (the weather in Minas Gerais and Espirito Santo in the 2020s has been hotter and drier, on average, than in the 2010s and the 2010s were hotter and drier, on average, than the 2000s) the potential for adverse weather to once again impact the Brazil crop is the biggest risk in 2025 and beyond,” said Wateridge. Such climate shocks are becoming increasingly frequent. “One reason climate shocks like this hit coffee production so hard is that not enough coffee farmers have plants that are highly productive and climate-resilient—too many farmers are stuck without good choices for what plants to grow,” said a spokesperson from the World Coffee Research, a non-profit agricultural research organization. “This is partly a result of the fact that breeding better varieties has not, until recently, been a priority (for example, we know that coffee faces a <a href="https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fworldcoffeeresearch.org%2Fresources%2Fcoffees-innovation-crisis&data=05%7C02%7CRachel.ARTHUR%40wrbm.com%7Cd917a7e6b0754c4348dd08dd35b3c0c9%7C8d5287f1f765422c89618fa7884626d9%7C0%7C0%7C638725768338760930%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=C5VmIMBPFo9h%2FRmEk2O%2B3poHFvta0z8GPpigas68Kr8%3D&reserved=0">$452 million/year agricultural R&D investment gap , which obviously and urgently impacts the sector’s ability to speed up technology development and deployment). But the coffee industry is learning to adapt. Specialists are looking at new areas where coffee could grow – such as higher altitudes – or exploring lesser known coffee varieties. “Multi-year commitments from WCR’s ~200 member companies in 30 countries have helped launch two global coffee breeding networks for arabica and robusta that together include the participation and collaboration of 11 producing countries, which export 43% of the world’s coffee,” says World Coffee Research. “These networks are creating the next generation of coffee varieties that will ensure stable supplies from diverse origins and are on track to deliver 100 improved arabica varieties by 2030, with robusta to follow. Investing in creating more resilient and productive plants creates transformational long-term benefits for farmers, industry, and national economies.”

What next for coffee prices?

Bad weather, supply chain challenges and high demand kept pushing the price of coffee up in 2024. Will this year be any different?

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