6 May 2025

The Current Coffee
Market Connundrum

    In February of this year, green coffee prices hit an all time high of $4.20 per pound. Before this, the cost of the coffee crop hadn't risen above $3 for nearly 50 years, and now for the past 6 months we have been seeing the price steady above $3 per pound.

    So the question is - What is causing this suddenly large increase in green coffee prices after so many years? To answer this question there are a few variables to consider when pricing coffee crops: geographical location, export and import costs, supply and demand, and crop yield.

    Coffee farms are found within the Coffee Belt, which is the geographical region around the equator between the Tropics of Cancer and Capricorn that includes Central and South America, Africa and Arabia, Indonesia, Southeast Asia, Australia, and Hawaii. Within the Coffee Belt there are areas with two harvest seasons - regions that experience frequent rainfall, and areas with just one harvest season - regions with well-defined dry and rainy season.

    When a coffee growing region experiences extreme climate change, the harvest season is disrupted and crop yield is lower than usual thus, causing a supply chain issue for the projected demand. Both Brazil and Vietnam, two of the world’s largest coffee producers, are experiencing drought conditions that are affecting the 2025 crop and also compromising the 2026 season. The low crop yields in these countries has resulted in supply shortages and have begun to increase coffee export price.

    Brazil stockpiles green coffee to support the market and keep enough available to cover future contracts. Because Brazil has been experiencing a prolonged drought, the stockpiles are not concurrently being replenished with this year's harvest therefore, only emptying the supply and causing prices to increase.

    Though coffee is not declared to be an essential good in the U.S., it still plays an important role in the economy and Americans’ daily routine. With the United States being the largest importer and consumer of coffee, the threat of tariffs has added insult to injury for roasters and consumers, as the added cost of the import tariff will mostly be passed on to them. Beyond the green coffee imports, small cafés are also having to worry about the large impact the increase of tariffs has on the cost of necessary consumables.

    So a final question remains - What can be done to mitigate the cost of coffee? The CEO of the National Coffee Association (NCA), the largest trade organization that represents businesses in the coffee industry, requested that coffee be exempt from the impending tariffs. Since the CEO’s request, a bipartisan Congressional Coffee Caucus has been formed to highlight the positive impact that coffee has on the U.S. economy, well-being of the American people, and the global coffee supply chain. Coffee is America’s go to beverage, enjoyed each day by two-thirds of the adult population, and if the adjusted import tariff does not exempt coffee, then prices will go up, and so will the cost of your daily routine.

As Ever,
    Victoria // Marketing & Comm Director CCR