Understanding the price at the cup...

You have probably noticed the price of your daily cup has increased across the board this year? Whether it is a latte from your favorite cafe or beans from your favorite online artisan roaster the cost at the cup has risen dramatically. Believe me it has been a very challenging year from a cost standpoint across the board and we have tried to absorb costs but ultimately have had to raise pricing just like all our peers and competitors have had to do. Simply due to coffee prices reaching historic highs and other global economic factors driving other costs sky high.

This week instead of coffee science I thought we would explore coffee economics. Which is important each and evryone of us who enjoys coffee daily. 

As of June 2025, ICE Coffee C futures prices have surged to historic highs, with July 2025 contracts trading above $4.30 per pound—levels not seen since the 1970s. This marks a dramatic increase of over 70% since November 2024, driven by a confluence of supply shocks, climate disruptions, speculative trading, and logistical challenges.

Current Price Trends

• Record Highs: Arabica coffee futures on the Intercontinental Exchange (ICE) have reached unprecedented levels, exceeding $4.30 per pound in early 2025. This is the raw traded cost of commodity (NOT Specialty grade) Brazil coffee which everything is hedged against. This is the very floor of the cheapest possible coffee. So across the board all raw coffees at the sourcing level, prices have risen between 70%-100% !!! 

• Volatility: The market has experienced significant volatility, with prices fluctuating due to various global factors impacting supply and demand.

 Key Factors Driving High Prices

1. Climate Disruptions in Major Producing Countries

• Brazil: Severe droughts and extreme weather events have significantly reduced crop yields in Brazil, the world's largest coffee producer. 
• Vietnam: Similar climatic challenges have affected Vietnam, the second-largest coffee producer, leading to decreased exports and tightening global supply. 

2. Supply Chain and Logistical Challenges

• Shipping Delays: Geopolitical tensions and disruptions in key shipping routes, such as the Red Sea and Suez Canal, have caused significant delays and increased costs in transporting coffee beans.
• Labor Shortages: Global labor shortages, particularly in harvesting and logistics, have further strained the coffee supply chain.

3. Speculative Trading and Market Dynamics

• Investor Activity: A significant portion of coffee futures contracts are held by investors and speculators, rather than producers or consumers, leading to price movements driven by financial markets rather than physical supply and demand. 
• Panic Buying: Concerns over future supply shortages have led to panic buying, further driving up prices.

4. Currency Fluctuations

• Weakening U.S. Dollar: The depreciation of the U.S. dollar has made commodities like coffee more expensive in dollar terms, contributing to higher prices.

Market Outlook

Analysts predict that coffee prices will remain elevated through 2025 due to ongoing supply constraints and strong global demand. Citigroup and ING have raised their price forecasts, anticipating that prices will normalize only if production improves in key regions. In summary, the current high coffee prices are the result of a complex interplay of environmental challenges, logistical issues, market dynamics, and currency fluctuations. These factors have combined to create a volatile market with prices at historic highs.

This is just one part of the puzzle - speaking to coffee prices exclusively. Importing costs, freight, shipping, packaging supplies have all seen very similar percentage increases in the past 5 months. 

The take away; coffee will continue to be expensive until market and global conditions improve. However, until then we encourage you to support the small artisan businesses that rely on amazing customers like yourself to weather the storm. We hope prices come down so we can offer deeper discounts, and relax pricing - however, that is uncertain and only time will tell if we are all so lucky.