Coffee Commodity Value and Coffee Bean Purchase: Global Trends and Impacts

What is Coffee Commodity Price and Why is it Important?

The coffee commodity price refers to the global market price determined on exchanges, which is the reference in the trade of coffee beans around the world. The Arabica coffee futures contract, which is traded especially on the New York Intercontinental Exchange (ICE), is commonly referred to as the “C market” (Coffee C Market) and is considered the basic indicator for global Arabica prices . This commodity price is formed for coffees that meet certain standards regardless of quality and directly affects the entire supply chain , from how many dollars coffee farmers can sell their product for to the cost of roasters' raw coffee. Indeed, for coffee professionals and coffee shop owners , fluctuations in the commodity price are a critical indicator that should be followed closely, as they determine the cost of the coffee beans they purchase. For example, when coffee futures prices in New York rose above $ 2.20 per pound in 2022, green coffee costs rose rapidly all over the world . This situation was reflected in the sales prices of even farmers producing micro lots of high-quality coffee, such as Ethiopia or Colombia; similarly, when the market fell, farmers had to earn lower incomes even if their production costs did not change. Therefore, coffee commodity value is of central importance both in terms of pricing in product supply and in terms of profits for sector stakeholders .

Historical Coffee Price Trends and Fluctuations

Coffee commodity prices have historically fluctuated widely. Prices can fluctuate sharply over time due to changes in the supply-demand balance, climate events, and economic conditions. Coffee prices were depressed for a long time in the late 1990s due to overproduction and stockpiling; in 2001, prices per pound fell to a low of $0.42, creating a crisis for producers. The first decade of the 2000s saw a recovery in prices, particularly due to increased demand in emerging markets (3.4% annual consumption growth) and the growth of the specialty coffee segment . World coffee prices peaked in April 2011 , when tight supply (especially for Arabica) and strong demand pushed prices to highs not seen since the 1970s. In 2011, the price of coffee per pound hit a record high of $3.06, but several large crop surpluses in a row sent prices back into a downtrend. The period 2012-2019 was generally recorded as a downward trend , except for short-term spikes in 2014 and 2016, and prices fell to their lowest levels in recent years in 2019. Indeed, coffee prices fell below $1.00 between late 2018 and mid-2019, leaving many small farmers in a difficult situation (lowest ≈$0.87 per pound in 2019).

Figure 1: Annual average coffee commodity price trend (US$/lb) from 2000–2025. Prices bottomed in 2001, rising again in 2011 and especially after 2021, reaching record levels in 2024–2025.

Table 1 summarizes the changes over the last few years. It is particularly striking how much the prices have jumped in 2021 and 2024:

Year	Year-End ICO Composite Price	Annual Change (%)
2018	1.02	-19.3%
2019	1.30	+27.3%
2020	1.28	-1.1%
2021	2.26	+76.3%
2022	1.67	-26.1%
2023	1.96	+17.4%
2024	3.20	+63.4%

† ICO Composite Index price is a composite indicator of different types of coffee.

The above data demonstrates the intensity of coffee price volatility . After bottoming out in 2019, markets rebounded in 2021 on the back of global post-COVID demand recovery and supply shocks such as the severe freeze and drought in Brazil that year. Coffee prices climbed sharply from mid-2021 to early 2022, reaching levels 64% higher than a year earlier in February 2022. Arabica prices rose faster than Robusta during this period, as Brazil’s share of world Arabica production (particularly due to the frost in Minas Gerais) created a large deficit in Arabica supply. Markets eased somewhat from mid-2022, before rebounding sharply in late 2023 and 2024. In 2024, world coffee prices rose by an average of 38.8% and reached multi-year highs. In particular , in December 2024, Arabica prices were 58% higher than the previous year, while Robusta prices were 70% higher, and the gap between the two varieties narrowed for the first time in decades. This trend continued in early 2025 ; in February 2025, the ICO composite index reached a nominal level of 354.32 cents/lb for the first time in its history, showing an extraordinary increase of 94% compared to the previous year. However, high volatility was also observed during the same period: markets peaked in mid-February, but retreated somewhat by the end of the month. In such a volatile environment, the need for all players in the coffee sector to manage price risk is increasing.

The price dynamics are driven by the inelasticity of both the supply and demand sides of coffee. Coffee consumption is inelastic to price changes; consumers largely continue to drink coffee even if prices increase. On the supply side, since the coffee tree has a long growing cycle, the price elasticity of production is low (supply elasticity is estimated at ~0.25). Therefore, even a small decrease in production or a small increase in demand disrupts the balance and leads to sharp price movements. The price explosion in 2024 is the result of exactly such a supply-demand imbalance: while adverse weather conditions reduced production in key producer countries such as Vietnam, Indonesia and Brazil, the continued increase in global demand after the pandemic pushed prices up. For example, in Vietnam, a prolonged drought reduced production by 20% in the 2023/24 season, excessive rainfall in Indonesia reduced the yield by 16.5%, and in Brazil, dry and hot weather disappointed expectations, causing a 1.6% decrease in production instead of an increase. In light of these developments, it is stated that prices may increase further in 2025 if supply losses continue in important production regions.

The Effect of Coffee Price Changes on Producer Regions

These price fluctuations in the global commodity market have a profound impact on farmers and economies in major coffee producing regions. South America and Africa are the two major coffee producers in the world and are affected by price movements in different ways.

Effects on South American Producers (Brazil, Colombia, etc.)

South America, especially Brazil and Colombia , are the centers of coffee production. Brazil is a giant producer that alone provides about one-third of the world's coffee production and produces both Arabica and Robusta (Conilon). Colombia , on the other hand, has a say in Arabica production. In these countries , high commodity prices generally have the potential to increase export revenues and farmer earnings. Indeed, the increase in prices in 2021-2022 increased the export revenues of Brazilian producers; in Colombia, coffee has also made a significant contribution to the national income. However, high prices do not always guarantee producer welfare. Extreme price fluctuations leave small farmers in uncertainty and make it difficult for them to make agricultural plans. For example, when prices were very low in 2019, many Latin American farmers could not even cover their costs, and some considered quitting coffee farming. Although farmers have earned more income during high-price periods (for example, in 2011 or 2024), these periods usually develop simultaneously with a decrease in production (due to disasters such as drought and frost). This reduces total sales , which may result in lower total revenues for some producers. While large producers in South America (such as large farms in Brazil) are better able to financially hedge against volatility, smallholder farmers in rural areas are disproportionately affected by volatility. According to FAO data, 80% of global coffee production is produced by small family businesses. Therefore, while price declines can mean financial hardship for this large segment of producers, increases can create opportunities to invest and pay off debt.

In Brazil, due to the size of the country’s market , weather conditions and production volumes in Brazil have become a factor that determines world prices. For example, a severe frost in Brazil in July 2021 damaged Arabica coffee trees, significantly restricting global supply and triggering a sharp increase in world prices in a few months. This situation had a double impact on Brazilian farmers : While producers affected by the frost lost crops, those who managed to save their crops were able to sell at record prices. Similarly, in Colombia , abnormal rainfall patterns (such as the La Niña effect) reduced coffee quality and quantity in 2022 and 2023; although Colombian producers sold at higher prices, some regions experienced income losses as total yields fell. In summary, while commodity price increases in South America mean increased export revenues for producers and national economies unaffected by disasters, price declines push small farmers, especially those with low financial security, into poverty.

Impacts on African Producers (Ethiopia, Uganda etc.)

The African continent has many important producers, especially Ethiopia, which is considered the homeland of coffee. Ethiopia is one of the world's largest Arabica producers and also a country with high domestic consumption. Uganda stands out with its Robusta coffee (it also produces some Arabica). Changes in coffee prices affect the fate of these countries at both micro (farming families) and macro (national economy) levels.

Coffee is one of the most important sources of foreign exchange income for the economies of many African countries. For example, in Ethiopia , coffee exports accounted for 33.8% of total export revenues in 2023. Similarly, in Uganda , coffee accounted for 15.4% of total exports in 2023. This level of dependency means that global price fluctuations are directly reflected in the country's economies . When prices are high, Ethiopia's and Uganda's export revenues increase, which is reflected positively in both the state budget and the household income of millions of farmers. Indeed, the sharp increase in robusta coffee prices in the international market in 2024 (+70%) has enabled robusta producing countries like Uganda to make significant profits. FAO data shows that Uganda's coffee export revenues covered more than 80% of the country's food import bill in 2023. This reveals that the increase in coffee revenues is critical for Uganda's food security and import capacity.

On the other hand, periods of falling prices mean tough tests for African producers. When prices fell in 2018-2019, for example, many farmers in Ethiopia and surrounding countries considered switching to other crops instead of coffee, and governments faced economic hardship due to the decrease in foreign exchange earnings. The prolonged decline in coffee prices undermines agricultural investments, inhibits productivity growth and keeps farm families in a cycle of poverty. Currently, the majority of coffee farmers worldwide live below the poverty line; by some estimates, this rate is approaching 80%. In smaller African economies that rely entirely on coffee, such as Burundi and Rwanda, any fluctuation in commodity prices directly affects rural livelihoods (for example, in Burundi, coffee provided 22.6% of export revenues in 2023).

As a result, high coffee prices are a vital lifeline for African producers , both for the continent’s fragile economies and for farmers’ livelihoods. When prices rise, farmers can pay off debts, send their children to school, and invest in farming practices. Some African countries even use the income from coffee exports during periods of high prices to finance infrastructure investments. Despite this positive outlook, however, the risks posed to coffee production in Africa by climate change are significant (discussed in the following sections). Unstable climate conditions are perhaps hitting African coffee production harder than in other regions, and producers may benefit only slightly, as price increases and production declines often coincide.

“Direct Trade” Importers and the Impact on the Coffee Supply Chain

Fluctuations in coffee commodity value deeply affect not only producers but also importers who buy coffee directly from the farm (direct trade importers) and the coffee supply chain in general. Importers are key intermediaries who purchase green beans from producing countries and deliver them to roasters or distributors. Many importers, especially in specialty coffee, operate through direct trade relationships with farmers, often purchasing at premium prices above the commodity market price. However, even these special relationships are not completely independent of the global C market : Experts note that even in the specialty coffee sector, the base price paid to farmers is often indexed to the world stock market price. For example, if an importer agrees with an Ethiopian farmer on a “C price + $0.50/lb premium,” the amount he or she will pay will automatically increase as the coffee price in New York increases. Thus, a rise in commodity prices increases importers’ purchasing costs , while a fall may reduce their costs; however, both cases present sustainability challenges.

When prices rise sharply , importers may experience financing and cash flow problems in the short term. For example, consider an importer who did not sign a fixed-price purchase agreement with the farmer six months ago: If the world price doubled during that time, it would require twice the capital to buy the same amount of coffee. It has been reported that some importers faced high collateral requirements and credit costs when prices skyrocketed in 2021-2022. It has even been discussed within the industry that some producer-exporters are trying to cancel previously agreed lower-priced contracts (default risk) due to the sudden increase in market prices. This poses risks to confidence and continuity of supply for importers working directly with farmers. Importers often try to hedge themselves with forward contracts to reduce this risk; however, this may not be possible for every small company.

When prices fall , a different challenge arises: When prices fall too low on the coffee exchange, some importers, especially out of ethical and sustainability concerns, give farmers purchase guarantees that will not fall below a certain floor price (such as Fair Trade or Living Income projects). In this case, even if the market price falls, the importer protects the producer by purchasing the coffee at a certain minimum price, but he himself bears a cost above the market. If the final buyers (roasters or cafes) are not willing to pay this cost difference, the importer's profit margin is eroded. Today, some roasters and importers are taking steps to set a "livable income price" independent of market prices . While this approach is important for a sustainable supply in the long term, it creates commercial pressure when the gap between the market price and the coffee increases in the short term.

For all these reasons, coffee shop owners and roasters also feel the impact of price fluctuations, albeit indirectly. Importers' increasing costs are reflected in roaster price lists and then in retail coffee prices. For example, Padre Coffee, a specialty coffee roaster in Australia, reported that they had to update their sales prices in 2024 due to the increase in green coffee costs. Similarly, it is stated that retail coffee (cafe latte, etc.) prices will increase by 5-10% by the end of 2024 in many countries, and a significant portion of this is due to raw material costs. In summary, when the commodity price increases, every link in the importer -> roaster -> cafe chain may have to revise the price upwards. This is reflected in the final consumer and increases the price of a cup of coffee . In fact, as of December 2024, coffee consumers in the US started to pay 6.6% more for their coffee compared to a year ago; similarly, a 3.7% increase was recorded in retail coffee prices in the European Union.

Future Predictions: Global Warming and the Effect of Increasing Consumption on Prices

The two critical factors that will determine the course of coffee commodity value in the coming years will be global climate change and increasing coffee consumption in the world . Experts agree that due to these two dynamics , upward pressure on coffee prices may continue in the medium and long term.

Global warming poses a major threat to coffee cultivation. The coffee plant grows in a relatively narrow climate zone (tropical high altitude regions) and is very sensitive to changes in temperature and precipitation. Climate models predict that if current trends continue, the land suitable for coffee cultivation worldwide could decrease by up to 50% by 2050. Arabica coffee, in particular, is a delicate species that requires cooler climates and is the most adversely affected by global warming. Scientific studies indicate a 50-80% decrease in Arabica production by 2050. This means that global coffee production, which is currently around 175-180 million bags, will have serious difficulties in meeting demand in the future. Climate change harms coffee not only in the form of temperature increases but also in the form of extreme weather events (e.g. severe droughts, unusual frosts, hurricanes) and the spread of new diseases and pests . For example, in Latin America, coffee leaf rust (Hemileia vastatrix) struck millions of farmers in the 2010s; warmer, wetter climates make it easier for such diseases to spread. All of these factors are destabilizing coffee supplies , creating the risk of a persistent supply shortage in the long term. The expectation of a supply shortage can be interpreted as a signal that prices will increase.

On the other hand, global coffee demand is steadily increasing . While traditional coffee consuming regions (Europe, North America) are close to saturation, coffee consumption is rising rapidly in emerging markets such as Asia and Africa . According to the International Coffee Organization (ICO) , global coffee consumption reached 175.6 million 60kg bags in 2023 , indicating that ~2.25 billion cups of coffee are consumed per day. In the coming years, demand is expected to continue to grow at an average of 2% per year due to population growth and the spread of “coffee culture”. The increase in per capita consumption, especially in large population countries such as China, India, Indonesia, and Nigeria , adds millions of bags to the total demand . For example, the ICO shared its estimate that global consumption will increase by 2.2% in the 2023/24 period, reaching 177 million bags. In the long term , the coffee market is seen to have the potential to grow by around 4-5% each year until 2030. This increase in demand is a factor that will inevitably push prices up if the supply side cannot expand at the same pace.

In the scenario where climate change restricts supply and consumption continues to rise, the value of the coffee commodity is expected to increase in the coming years . Indeed, the record price levels at the beginning of 2024 reflect the market's concerns about the future. FAO's base case scenario for 2025 is that prices will remain high even if there are no serious climatic disruptions in major producing regions. If unexpected supply shocks occur (such as another frost in Brazil or a coffee rust outbreak in Central America), additional price increases may follow. On the other hand, efforts are being made to develop productivity-enhancing measures and climate-resilient agricultural practices in the coffee sector. For example, adaptation strategies such as new shade-grown coffee varieties, genetically disease-resistant varieties, and agroforestry techniques are on the agenda. The aim of these efforts is to mitigate the impact of climate change on production and keep supply as stable as possible. However, experts point out that coffee production costs will increase in the coming decades (due to extra investments in irrigation, fertilization, planting shade trees, etc.) and this will be reflected in prices.

As a result, the combination of supply risk from global warming and increasing global demand is creating a “double effect” that is likely to pressure the value of the coffee commodity upwards in the medium to long term. Under these conditions, both producers and buyers in the coffee trade are expected to develop more risk management strategies (e.g. forward sales agreements, weather insurance). In addition, as part of sustainability initiatives, some major roasters and retailers are creating funds to combat climate change and support producers, which is reflected in costs, albeit to a small extent.

Conclusion

Coffee commodity value is a critical indicator that is a common denominator for all players in the coffee sector. Coffee professionals and cafe operators can manage their costs and determine their pricing strategies by understanding and predicting the course of this price. Fluctuations in recent years have shown how sensitive the coffee market is to balance. Millions of small farmers in the producer geography extending from South America to Africa are directly affected by these price fluctuations; they experience periodic increases in prosperity or crises. Similarly, importers who purchase directly from the farm and players in the specialty coffee sector also face the opportunities and risks brought by the global commodity price.

In the upcoming period, the value of the coffee commodity is likely to remain high in the equation of decreasing supply growth under the pressure of climate change and increasing coffee appetite in the world . This situation may require a wide range of supply chain re-planning from coffee shop owners to national economies. The sector’s ability to adapt, technological innovations and international cooperation (e.g. fair trade, farmer support programs, climate finance) will be decisive in overcoming these challenges. In the final analysis, careful analysis of coffee commodity price developments will continue to be an indispensable tool for coffee professionals, both in terms of daily business decisions and long-term sustainability.

D.EMRE KURTULUS