Coffee bean prices have risen more than gold prices

Gold prices have soared since 2025, but coffee beans, the raw material of coffee, have risen more sharply than gold.

According to Bloomberg News, exports from Brazil, the largest coffee bean grower, fell in January and low inventories exacerbated market volatility. On February 13, the price of Arabica coffee futures (KC1 Comdty, coffee “C” contract) on the Intercontinental Exchange (ICE) in New York, the United States, rose to 4.389 cents per pound, reaching the highest level since data was available in 1972. The price has doubled in the past year, with an increase of 119.94%, far exceeding the more than 40% increase in the spot price of gold.

According to the Bloomberg terminal, the coffee “C” contract is the global benchmark for Arabica coffee. This contract indicates the physical delivery price when coffee beans that meet the exchange grade are shipped from an authorized warehouse in one of the 19 countries/regions of origin to one of the ports in the United States and Europe, which will indicate the premium/discount for the port and origin. Requests to harvest washed Arabica coffee beans from certain countries in Central America, South America, Asia and Africa.

The International Coffee Organization said recently that global Arabica coffee exports in December 2024 were 6.3% lower than the previous year, although exports in the crop year that began in October were higher than the same period last year.

Hedge funds remain bullish, increasing their net long position to a seven-month high, according to data from the U.S. Commodity Futures Trading Commission for the week ending February 4. Investors are looking for signs of easing supply tightness. Arabica coffee port stocks monitored by exchanges have increased recently after hitting the lowest level since October last year.

Prices have more than doubled in the past year due to tight supplies in top producer Brazil and market concerns that bad weather could affect the harvest of the next Arabica coffee harvest. And in Vietnam, the top producer of cheaper Robusta beans, drought during the growing season and heavy rains at the harvest season have put production concerns in the key coffee growing belt.

Harry Howard, a broker at Sucden Financial, said in a report that technical indicators still look tight, and the relative strength index of Arabica coffee suggests that prices may have risen too fast and too much.

People are increasingly concerned about future production in Brazil, the largest coffee grower. Brazil’s strong exports at the beginning of the season have exacerbated the current supply pressure, and local farmers have sold more coffee beans than in previous years at this time of year, which makes people wonder how much inventory is left to ship.

Securities research reports show that more than 70% of the world’s coffee beans are produced in five countries: Brazil, Vietnam, Colombia, Indonesia and Ethiopia. The “Coffee: World Markets and Trade” report released by the U.S. Department of Agriculture (USDA) in December 2024 shows that global coffee consumption is expected to increase to 168.1 million bags in 2024/25, an increase of 5.1 million bags.

According to the forecast of Volcafe, an international coffee trader, the global coffee bean production is expected to be short of 8.5 million bags in the upstream 2025-2026. If this comes true, it will be the fifth consecutive year of coffee bean supply shortage.

As the price of coffee beans continues to rise, the retail price will also rise accordingly, which is bound to accelerate the impact on consumers.

At present, many well-known coffee brands around the world have announced price adjustment plans. Japan’s Ajinomoto AGF announced that it will adjust the prices of 172 kinds of stick coffee and instant coffee products from March 1, 2025, with an increase of 15% to 30%. The company explained that the price increase was mainly due to the significant increase in the cost of raw materials such as coffee beans, and the increase in import costs caused by the depreciation of the yen.

In addition, Brazilian coffee roasters such as JDE and PEETS, as well as Italian coffee manufacturer Cabassa, also raised the prices of coffee beans and their products in early 2025. Italian coffee giant Lavazza also said that in the context of continued rise in raw material prices, the company had to adjust product prices to ensure product quality.

In January this year, Starbucks in South Korea also raised the prices of its coffee and tea products. Industry insiders said that as an industry benchmark for chain coffee brands, Starbucks’ price adjustment measures are likely to trigger follow-up by peers, further pushing up market prices.

According to data released by the Korea Customs Service, in January this year, the import price of coffee beans per kilogram increased by nearly 70% year-on-year.

In order to ease the pressure of rising costs of major raw materials, the Korean catering industry has launched “beanless coffee” drinks that use other raw materials to replace coffee beans. According to the head of a coffee shop in downtown Seoul, making “beanless coffee” requires fermenting, drying, grinding and baking 12 raw materials such as barley, hibiscus and orange peel. The prices of these raw materials are relatively stable and the market supply is sufficient. At present, this coffee shop has launched three decaffeinated drinks such as Americano and latte, and the production cost is about 20%-25% lower than that of ordinary coffee on the market.

Amid the rise in coffee prices overseas, can we still drink coffee at 9.9 yuan a cup in China? At present, coffee brands such as Starbucks China, Kudi Coffee, Luckin Coffee, and Tims China have also stated in response to the media that they have not been affected by the coffee bean price increase.

Industry insiders said that large chain coffee companies generally have a “foresight” in the industry and stock up in advance, prices will remain relatively stable, and the ability to resist risks will be relatively strong. Zhu Danpeng, a Chinese food industry analyst, recently said that domestic coffee beans may usher in greater development, growth and expansion space. Coffee farmers in Yunnan, China have gradually entered a development cycle of standardization, specialization, branding, capitalization and scale, and have become China’s largest coffee producing area in recent years. Relevant data from the Yunnan Provincial Department of Commerce show that Yunnan Province has 1.15 million acres of coffee planted, and its annual coffee output accounts for 95% of the country’s total.

However, as the international futures price of coffee beans has soared, the price of Yunnan coffee beans has also risen. Li Xiaobo, president of the Yunnan Coffee Industry Association, said: “The price of green beans produced in Yunnan has indeed increased in recent years. The current price of first-grade green beans fluctuates around 52 yuan/kg, while it was around 32 yuan/kg in the same period of 2024. The rise in international coffee futures prices is beneficial to Yunnan growers, attracting more attention and increasing the willingness of local growers to plant.”