Coffee prices fall following sharp rise

Coffee prices have shot up over the past twelve months, with both Arabica and Robusta experiencing record highs of 9.049 USD/kg and 5.812 USD/kg respectively, in February.

This rise has been felt across the industry, with manufacturers absorbing some of the costs, then having no choice but to pass the remainder on to their customers. And that remainder wasn’t small, with the average price of a cup of coffee increasing by 17% since 2022 (Lumina Intelligence). However, there are signs that coffee prices are beginning to stabilise, as they level out and begin to decline.

What sparked the rise in coffee prices?Like many other high-value commodities, including sugar, cocoa and olive oil, climate change has disrupted coffee production.

Brazil, by far the largest coffee producer in the world, has suffered from prolonged drought conditions, which have threatened crops.

“It is the dry season in Brazil, but extreme and unusual heat this winter has reduced soil moisture reserves to dangerously low levels,” said Jon Davis, chief meteorologist at supply chain risk management firm Everstream Analytics, in September 2024.

Added to that, extreme drops in temperatures also proved damaging.

“In Brazil we see the impact frost has on the crop,” said Paul Rooke, executive director of the British Coffee Association. “In some years it can have a more significant effect than others, and the challenge is maintaining production if those lower temperatures and frosts become more frequent and/or more widespread.”

But, rather than continuing to deteriorate, growing conditions in Brazil, which produces both Arabica and Robusta, have improved.

Coffee price fluctuations over the past 12 months (source: YCharts)MonthArabica

Value (USD/kg)Robusta

Value (USD/kg)May 20258.7715.242April 20258.6365.425March 20258.9195.690February 20259.0495.812January 20257.8155.408December 20247.5695.219November 20246.7244.985October 20246.1024.892September 20246.1255.330August 20245.7644.733July 20245.6684.734June 20245.4764.504Why are coffee prices falling?“The weather in Brazil is currently benign,” says Ben Schräder, market analyst at Vesper.

As a result, coffee harvests are expected to be, “high-quality and plentiful”, signalling a reprieve for the industry, which feared a continuing increase in prices alongside a decline in supply.

Aggressive selling by suppliers to manufacturers also helped to drive prices down. However, this sell-off means that most of the 2024 crop is now sold out, which could result in a subsequent rise in prices if crops are not as “plentiful” as predicted.

“Brazil’s harvest has not peaked yet,” says Schräder. “Any weather disruption could alter forecasts.”

Are coffee prices stabilising? (encrier/Image: Getty/encrier)Volatility of coffeeCoffee is a highly volatile commodity, making it vulnerable to climatic changes.

“Coffee is a crop that needs particular things,” says Everstream Analytics’ Davis. “It needs a specific elevation, specific soil, and specific weather conditions during the season. There are not that many areas in the world that have this unique combination of agronomic variables.”

That’s not to say nothing can be done to protect the crop’s future, just that it presents specific challenges to growers. As a result, coffee producers are innovating to overcome the problems created by climate change, finding alternatives to the current growing systems.

“There are a wide range of initiatives being undertaken both by individual businesses and bodies such as Global Coffee Platform, which are looking at climate mitigation practices,” says British Coffee Association’s Rooke. “These would cover areas such as shade coffee production, carbon sequestration projects, soil and water conservation projects. The key is being able to understand how and why the successful projects are successful and how they might then be replicated on a wider scale.”

Furthermore, organisations such as World Coffee Research are working to identify varieties of coffee bean, which are best suited to the changing climate, as well as developing popular varieties to cope with the changing conditions.

Coffee is a $473.15bn industry. (Image: Getty/Adam Gault)Is the tide turning on commodity prices?FoodNavigator recently reported on falling sugar prices, resulting from increased sugar cane yields in Brazil contributing towards strong supplies globally.

Similarly, consumer favourite cocoa is also dropping in price, following record highs in January of this year. This is a result of recovering cocoa yields bolstering global supplies.

And the price of olive oil is projected to drop in the coming months as favourable growing conditions have resulted in successful olive crops.

All this begs the question, is the commodity crisis coming to an end?

Unfortunately, the short answer to this is, no. Because while the current situation is certainly positive news for the food and beverage industry, commodity markets remain reliant upon favourable growing conditions, which increasingly fall victim to extreme weather events fuelled by climate change.

“There is a direct correlation between the increase in extreme weather events and impacts on agricultural production,” says Everstream Analytics’ Davis. “The increase in extreme weather events – drought, flood, convective storms, and tropical cyclones – has been increasing for many decades. Recently, these increases have accelerated.”

Coffee is the third most popular drink in the world, after tea and water. (Image: Getty/LanaSweet)