The future price of coffee

Australia is experiencing a notable increase in coffee prices, influenced by several global factors:

Droughts in Brazil and Vietnam: Severe droughts have significantly reduced coffee production in Brazil and Vietnam, the world's leading coffee producers. These adverse weather conditions have disrupted supply chains, leading to higher global coffee prices.

Rising Demand in China: China's growing coffee culture has led to increased consumption, further straining global coffee supplies. This surge in demand contributes to the upward pressure on prices.

Australian Dollar Fluctuations: The value of the Australian dollar affects import costs. A weaker Australian dollar makes imported coffee more expensive, contributing to higher prices for consumers.

These combined factors have led to predictions that the cost of a cup of coffee in Australia could reach between $8 and $12 by the end of 2025. Industry experts highlight that the rising wholesale prices of coffee beans, driven by supply shortages and increased demand, are significant contributors to this anticipated increase.

Additionally, supply chain challenges, including increased shipping costs and port congestion, are exacerbating the situation, leading to higher costs for cafes and consumers alike.

Coffee roasters purchasing raw beans are directly impacted by the C price, a key benchmark in coffee trading that significantly influences pricing.

Understanding the Coffee “C Price”

Coffee prices have been making headlines, but what exactly is the price of coffee? The answer depends on perspective—ranging from the cost of a latte to the price farmers receive for their harvested cherries. Along the supply chain, multiple price points exist, but the most referenced benchmark in the industry is the C price for green arabica coffee.

What Is the C Price?

The C price is a benchmark for arabica coffee futures, established on the Intercontinental Exchange (ICE) in New York. It originates from “Centrals,” a term used by Central American producers to distinguish their coffee from Brazil’s. This futures contract allows traders to speculate on coffee prices, influencing the broader market.

Price Fluctuations and Market Volatility

Coffee prices are cyclical, affected by supply, demand, weather, and economic shifts. Historically, the International Coffee Agreement (ICA) regulated prices until its collapse in 1989, leading to extreme volatility.

Key price shifts:

• 1989-2004: Post-ICA, prices dropped below $1 per pound, triggering crises.

• Early 2010s: Prices surged due to coffee leaf rust disease.

• 2017-2020: Another crisis, with prices dipping below $1.

• 2025: C price surpasses $4 per pound for the first time.

The Role of Speculation

The C price isn’t solely dictated by coffee supply and demand but is also influenced by hedge funds and investors who never handle coffee. Their speculation can drive prices up or down, often detached from real-world production costs.

An Arbitrary Benchmark?

Despite its central role in coffee trading, the C price is a financial construct shaped by market speculation rather than the realities of coffee farmers, roasters, and consumers. While it continues to dominate industry discussions, it remains just one of many factors impacting the true cost of coffee.

Coffee prices are expected to keep rising due to global supply challenges, increasing demand, and market volatility. While your daily cup may become more expensive at cafés, buying beans for home brewing remains a cost-effective way to enjoy high-quality coffee. Investing in good beans and brewing at home can help you save money while still indulging in your favorite coffee experience.