Global Coffee Market Overview

Global coffee prices have jumped 38.8% in 2024 from a year earlier, hitting a multi-year high.

Coffee, one of the most important agricultural commodities in the world, is not only a popular beverage but also plays a vital role in the economies of many countries. With millions of people involved in the supply chain from production to consumption, the coffee industry has undergone many changes over the past decade. To date, the global coffee market has witnessed dramatic changes in prices, consumption trends, and factors affecting production.

Global Coffee Market

The global coffee market has been evolving over the years, with periods of strong growth as well as inevitable declines. A report from the Food and Agriculture Organization of the United Nations (FAO) on March 14 showed that coffee prices in 2024 increased by 38.8% compared to the previous year, reaching a multi-year high. Although coffee prices have adjusted after peaking in early 2025, forecasts still show that major fluctuations will continue to occur in the near future.

The two main coffee varieties on the market, Arabica and Robusta, have both seen significant increases in value. Arabica, the premium variety, recorded a 58% increase in December 2024 compared to the same period last year, reaching its highest level in more than 40 years on the New York Stock Exchange.

Meanwhile, Robusta, which is mainly used in instant and blended coffee, has increased by about 70%. The price gap between the two coffees has been narrowing, indicating the strain on global supply and consumption.

In early February 2025, Arabica coffee futures hit a new record high of $4.41 per pound, double the previous year’s level. This was the highest price since Arabica coffee was listed on the CME Market. Illustration photo

In early February 2025, Arabica coffee futures hit a new record high of $4.41 per pound, double the previous year’s level. This was the highest price since Arabica coffee was listed on the C Market (CME). However, prices have since fallen below $4 per pound thanks to strong exports from Brazil and a recovery in global coffee stocks. However, experts still predict that the price rally may not be over.

Key factors affecting the coffee market

Climate change is now considered one of the most important factors affecting global coffee production. Coffee is mainly grown in countries located in the "coffee belt," where climatic conditions are ideal. However, erratic weather patterns, including droughts, frosts, and heavy rains, have had a major negative impact on coffee production. In major producing countries such as Brazil and Vietnam, climate change has significantly reduced coffee production. Arabica coffee in Brazil is expected to decline by 10% in 2024, while Robusta coffee in Vietnam is also expected to decline by 5-7%. This has caused coffee prices to increase sharply, reflecting scarcity and increasing demand.

Coffee consumption is also growing rapidly, especially in Asian countries. China, a country with no tradition of coffee consumption, has seen a dramatic change in consumer habits, with coffee consumption expected to increase by 15% by 2024. Large coffee chains such as Starbucks and Luckin Coffee have flourished in major cities such as Beijing, Shanghai, and Guangzhou. In addition, coffee consumption in Southeast Asian countries such as Vietnam, Indonesia, and Thailand has also increased sharply, contributing to the growth of the global coffee industry.

Impact on the global coffee industry

Impact on producers: While rising coffee prices may benefit producers in the long term, in the short term they face challenges in terms of production costs and uncontrollable factors. Climate change forces producers to invest in adaptation measures, increasing production costs. At the same time, transportation, fuel and labor costs increase, affecting producers’ profits.

Impact on roasters and coffee shops: Roasters and retail coffee shops are also affected by the fluctuation in coffee prices. In response to the rising raw material prices, big brands such as Starbucks, Dunkin, and smaller coffee shop chains have had to increase their prices. This has led to a change in consumer habits, with many consumers deciding to reduce the amount of coffee they buy outside or looking for cheaper coffee products.

Impact on consumers: The rise in coffee prices has had a profound impact on consumers, especially those with low and middle incomes. Facing high coffee prices has forced consumers to adjust their spending habits, reducing the frequency of drinking coffee outside. This has also led to an increase in demand for coffee consumption at home, as many people choose to buy pure coffee or instant coffee to save costs.

Trading and investment strategies

Avoid Investing in Public Coffee Chains: When coffee prices are rising, investing in publicly traded coffee chains like Starbucks, Dutch Bros, or Luckin Coffee may not be the best strategy. While these companies are well-known, their stock prices are not only affected by coffee prices but also by changes in consumer demand, customer habits, and operating costs. Additionally, global economic factors and competition between brands also have a strong impact on their stock prices.

The coffee futures market is an opportunity as coffee prices climb: Traders have been taking long positions for the past two years, with the number of Arabica coffee futures contracts hitting a record of nearly 300,000 contracts in early 2024. This suggests that investors expect coffee prices to continue to rise.

However, the coffee market is facing oversold conditions, especially Arabica coffee. According to a report from the Futures Trading Commission - an independent US federal agency tasked with overseeing and regulating derivatives markets, the massive participation of investors has pushed prices up. Although there is an opportunity to profit from price fluctuations, there is also a great risk because prices can change rapidly, requiring flexible trading strategies and close monitoring.

Countermeasures as coffee prices continue to rise

As coffee prices continue to trend upward, some experts predict prices could reach between $5.50/pound and $10/pound if market conditions continue to deteriorate.

Bob Fish, founder of Biggby Coffee, a popular coffee chain in the US, pointed out that the strong rise in cocoa prices in 2024 is a sign that coffee prices may also have a short-term spike. Although not yet at the historical high (as in 1977), the price of coffee at $4.41/lb suggests that the market may continue to be volatile in the near future.

As coffee prices rise, roasters will need to adjust their prices to maintain profitability. Some companies, such as Royal Coffee, have suggested raising prices by $2 to $4 per pound for whole bean coffee, which would add 25 to 50 cents to the price of a cup of coffee in cafes. If coffee prices remain high, roasters may need to make more drastic price adjustments in the future.

The rise in coffee prices will certainly impact consumer habits, as many customers may cut back or look for cheaper coffee products. Coffee shops will need to adapt by offering more affordable products or premium coffee services to retain customers. Investing in in-home coffee services or coffee subscription programs can be an effective strategy to retain customers and minimize the impact of price fluctuations.

Climate change, rising demand and competition between producing countries are creating a highly volatile environment for the coffee industry. Coffee companies and investors need to be agile and have long-term strategies to cope with these changes and take advantage of the opportunities presented by the rapidly growing global coffee market.

Source: https://congthuong.vn/tong-quan-thi-truong-ca-phe-toan-cau-379363.html