Climate and higher consumption should keep coffee prices on the rise
Coffee prices should continue to rise in the coming weeks, at least until this year’s harvest, which starts around April or May, Brazil’s coffee industry association Abic reported. The main cause behind the hikes is climatic events, which impact the harvest. The higher consumption around the world and the emergence of a new global consumer market—China—also play a role. 
This impact on prices is believed to continue for another two or three months. After that, there should be a period of slowdown in the value of the product, with a certain stabilization. The fall in prices, however, should only begin with next year’s harvest, the association estimates.
The increase in coffee prices has been observed since November last year. It is not just a phenomenon observed in Brazil—the world’s leading coffee exporter, accounting for almost 40 percent of world production, followed by Vietnam (around 17 percent) and Colombia.
The harvest
The Brazilian harvest broke records in 2020, but the following years were unfavorable, influenced as they were by the weather. In 2021, a frost wiped out nearly a quarter of the arabica crop. In 2022, no recovery came. It usually takes two years for crops to recover from such an event, the association argued.
In 2023, the crop suffered the effects of El Niño, with a long period of drought and high temperatures. Finally, last year was assailed by La Niña, with prolonged rainfall.
“This is really bad for the crop,” Abic President Pavel Cardoso stated, adding that this year’s harvest will be slightly smaller than last year’s.
“This accumulation of four years of climatic problems and the growth in global demand explain this surge in coffee prices,” he remarked.
With all these issues, manufacturers were forced to raise production costs. As a result, the cost of the raw material went up. The industry, the association said, saw increases of over 200 percent and had to pass on a portion of this—some 38 percent—to the consumer.
These factors combined ended up contributing to the rise in commodity prices on the international stock exchanges, which also had an impact on consumers’ pockets. On the New York Stock Exchange, the main arabica coffee contracts reached their highest levels in history. Today, for instance, the price rose again and hit a record—$3.97 a pound.
“Regarding this record—which is nearly reaching four dollars a pound—a lot has been attributed to the potentialization of this short supply. It’s a strong influx of funds leading to a historic figure, but it’s important for the whole sector to reflect on. Will it bring gains for everyone?” Cardoso said. “This escalation will stop at some point; we just don’t know when. That’s the question we’re all asking ourselves.”
Estimates
Abic expects this year’s crop, which begins to be harvested in April, to help stabilize prices. The sector also has high expectations for next year, which could beat the 2020 record, helping increase supply and lower prices. In the meantime, consumers are likely to continue to bear the brunt of the rise in coffee prices, as the industry still has costs to pass on.
“With regard to the raw material, we should still have some additional volatility until the harvest, which should be tense due to a really short supply. Once the harvest comes in, some stability is likely. After the harvest, therefore, looking ahead to 2026, we expect a large crop, possibly higher than 2020,” Cardoso noted.
“Concerning consumers, we’ll have some additional increase; after all, we had hikes of over 180 percent for the industry, which absorbed this rise and passed some of it on to the markets, reaching 37 percent for consumers. So part of this increase will be passed on to retailers and consequently to consumers,” he stated.
Industry data
Coffee consumption in Brazil from November 2023 to October 2024 grew by 1.11 percent compared to the previous year, as per Abic data published Wednesday (Feb. 5).
Brazil—the world’s largest producer and exporter of the product—is also the world’s second largest consumer of coffee, having consumed 21.916 million sacks in 2024—4.1 million sacks fewer than those consumed by US, the nation standing atop the ranking. The figures also reveal that Brazilians consume an average of 1,430 cups of coffee a year.
The roasted coffee industry’s turnover in the domestic market totaled BRL 36.82 billion last year, a variation of 60.85 percent from 2023. The change is due to the increase in the price of coffee on the shelf. In the foreign market, sales amounted to BRL 134 million.
Specialty coffees saw a 9.80 percent hike comparing January 2024 with December 2024. The gourmet category recorded an increase of 16.17 percent; superior coffees, 34.38 percent; and traditional and extra strong coffees, 39.36 percent. Capsule coffees also showed a hike—2.07 percent.
Over the last four years, the raw material has soared by 224 percent, and retail coffee has leaped by 110 percent. Last year, the consumer price variation for roasted and ground coffee was 37.4 percent—a higher increase than the average for the basic food basket (2.7%).
