Coffee C Price Soars Past $4/Pound Mark For An All-Time High

On Thursday, 6th February, at approximately 10 am (AEST), the coffee C price surged past $4 per pound (400.00 cents) for the first time in history. We were glued to our computer screens in anticipation of the historical event. Just months earlier, in November 2024, it shattered the long-standing record of $3.39 per pound—a peak that had held for nearly five decades since April 1977. Then, in less than two months, it breached the $4 mark, ultimately closing at an exact $404.35 cents per pound at the end of business on Friday, 7th February.

What is the C Price and why is it so high?

The C Price or Commodity Price refers to the benchmark price for arabica coffee traded on the Intercontinental Exchange (ICE). It serves as a reference for coffee contracts worldwide, dictating the base value of coffee before factoring in quality premiums or country-specific differentials. The price fluctuates based on market supply and demand dynamics and is heavily influenced by global trading activity.

Typically, the C price ranges between $1.00 and $1.50 per pound. In the past decade, it has dipped as low as $0.87 per pound (2019) and surged past $2.00 per pound, notably in 2022, when frost and drought in Brazil caused major disruptions.

Last year, both Brazil and Vietnam faced significant yield reductions due to adverse weather conditions, causing a major spike in the C price. Brazil, the world's largest exporter of Arabica coffee, has been affected by irregular rainfall and high temperatures, leading to an estimated 10 to 15 percent decline in yield compared to last year.  

While Vietnam, the leading producer of robusta coffee, has struggled with severe drought conditions, with estimates pointing to a 20 to 30 percent drop in output—the most substantial decline in years.  

With supply at its lowest levels in years and demand continuing to rise, the market is under immense pressure. At the same time, Vietnamese robusta—often a more affordable alternative to arabica—has also surged in price due to Vietnam’s severe drought, leaving buyers with fewer options. This combination of constrained supply and soaring costs has created a ripple effect, accelerating the sharp increase in the C Price.

What influences the C Price?

The C Price is shaped by a complex interplay of factors that influence global coffee markets. Supply and demand play a crucial role, as weather events, crop diseases, and production levels in key growing regions can significantly affect availability.

Market speculation and futures trading also contribute to price fluctuations, with hedge funds and traders buying and selling coffee contracts based on projections and sentiment. 

Furthermore, currency fluctuations also impact pricing, as coffee is primarily traded in U.S. dollars, making exchange rate shifts particularly relevant for top-producing nations.

Additionally, geopolitical events and political instability can cause disruptions in major coffee-growing regions, putting further upward pressure on prices.

How is coffee traded and who is buying this coffee?

Coffee in the commodity market is primarily traded through futures contracts on the Intercontinental Exchange (ICE), with the C Price serving as the benchmark for arabica coffee. In this system, buyers and sellers agree to purchase or deliver a set amount of coffee at a predetermined price on a future date. 

The primary buyers of coffee futures contracts include roasters, importers, and multinational corporations that secure long-term contracts to stabilise their supply chains and mitigate the impact of price swings. These companies, which range from large-scale roasters like Starbucks to giant corporations like Nestlé, use futures contracts to plan purchases months or even years in advance.

In addition to industry players, financial speculators and large trading firms also participate in the coffee futures market. These entities buy and sell contracts not to take physical delivery of coffee but to capitalise on price movements. Their involvement can drive volatility, as speculative trading often reacts to market sentiment, macroeconomic trends, and external shocks rather than actual supply and demand fundamentals.

While the futures market is essential for maintaining liquidity and ensuring that coffee remains widely available, it also introduces complexities that can lead to sudden price swings, impacting both producers and consumers at different points in the supply chain.

What does 'futures' actually mean?

A futures contract is a financial agreement to buy or sell coffee at a predetermined price and receive delivery on a specific date in the future. These contracts can help both producers and buyers manage risk. Farmers and cooperatives may sell futures to lock in prices and secure income, while roasters and retailers use them to manage purchasing costs.

While this system may work well under normal conditions, during price spikes, futures contracts can become a major disadvantage for producers. Many farmers pre-sell their coffee months in advance at lower prices to ensure stable income, often out of necessity rather than strategy. When the market surges, they remain locked into outdated contracts, unable to benefit from higher prices, while large corporations, traders, and financial firms reap the rewards.

Speculation in the futures market further skews pricing, creating volatility that serves investors but leaves producers struggling with agreements that no longer reflect real-time market conditions. If they attempt to default and sell at higher rates, they risk financial penalties, strained relationships with buyers, and potential exclusion from future contracts, limiting their options even further.

Even when prices are high, farmers seldom see significant benefits, as rising production costs—such as labour, fertilisers, and transport—quickly erode potential profits. Price surges also incentivise increased planting, leading to future oversupply and inevitable price crashes. This boom-and-bust cycle keeps producers trapped in financial uncertainty, while large trading firms and speculators continue to profit from the very instability that makes coffee farming so precarious.

What does this mean for small-scale specialty coffee roasters?

Roasters, especially smaller specialty coffee businesses, will feel the pressure as green coffee costs surge. While specialty coffee isn’t directly traded on the C market, the C price serves as a global benchmark, influencing all coffee prices—including high-quality, premium lots. When the C price rises, specialty coffee follows suit, often at a similar rate. This impact is immediate, with price quotes sometimes changing overnight, forcing roasters to navigate sudden cost increases.

To stay afloat, many roasters will need to adjust their pricing strategies, absorbing some of the costs while passing others onto consumers. Some may explore alternative origins or lower-cost coffees to maintain profitability without raising prices too sharply, or purchasing spot coffee (coffee that has already landed and is available now). In an already competitive market, these shifts could reshape sourcing decisions and consumer expectations, making it increasingly difficult for smaller roasters to maintain both quality and affordability.

Will large coffee corporations ever feel the pinch?

Large coffee corporations, such as Nestlé, JDE Peet’s, and Starbucks, are generally more insulated from short-term price spikes due to their long-term supply contracts, hedging strategies, and economies of scale. Unlike smaller roasters who buy coffee on shorter timelines, these companies often secure futures contracts well in advance, locking in lower prices before the market surges. Additionally, they have greater financial leverage to negotiate better terms with suppliers and absorb cost increases without immediately passing them on to consumers.  

However, if high prices persist for an extended period, even large corporations will feel the impact. Their costs for future contracts will eventually rise, and supply chain expenses—including labour, transportation, and processing—will also increase. While they may be able to offset some of these costs through operational efficiencies or incremental price hikes, sustained price volatility could put pressure on margins, particularly in the lower-cost coffee segment where price sensitivity is high.

Will the C Price ever come down and should it?

The C Price will almost certainly come down at some point—commodity markets are cyclical, and coffee is no exception. Historically, coffee prices have experienced dramatic booms followed by sharp declines, often driven by supply shocks. During such spikes, producers will often plant even more trees, often resulting in oversupply the following years, pushing prices back down again. 

While high prices strain roasters and consumers, they can also offer much-needed financial relief to producers who have historically struggled with unsustainably low prices. Among everyone in the coffee supply chain, producers are almost always the last to benefit. Across the coffee supply chain, producers are often the ones left behind. While we would love to see them earn what they truly deserve, the harsh reality is that prices will inevitably fall again—driven by oversupply, market speculation, and the relentless pressure from powerful corporations and traders who prioritise profits over fairness.

What about inflation? Why hasn't the price of coffee gone up?

The C Price has remained relatively stable in nominal terms for decades, but when adjusted for inflation, it tells a very different story. In real terms, coffee farmers have been earning significantly less over time, despite rising costs of production, labour, and living expenses. To put this into perspective, if the C Price had kept pace with inflation since its peak of $3.39 per pound in April 1977, it would be approximately $17.57 per pound today. Instead, even with the recent surge past $4 per pound, coffee remains vastly undervalued in real terms, highlighting how producers have been left behind.

One major reason is the sheer volume of coffee production. Increases in supply, particularly from Brazil and Vietnam, have often outpaced demand, keeping prices low. Additionally, coffee is highly susceptible to speculation, with traders and hedge funds influencing price movements based on market sentiment rather than actual production costs.

Large coffee-buying corporations have also used their market power to keep prices down, sourcing from producers willing to sell at the lowest possible rates. Unlike products in regulated markets, coffee remains subject to extreme price volatility but lacks mechanisms to ensure that its value rises in line with inflation.

This means that while everything else—wages, rent, and materials—has steadily increased in cost, coffee farmers have not seen the same financial gains. It’s only during supply shocks, such as droughts or production disruptions, that prices spike temporarily, but these moments rarely provide long-term financial stability.

Without structural changes, including higher baseline pricing and stronger producer protections, coffee will continue to be one of the few essential commodities that does not keep up with the rising cost of living, leaving those who grow it struggling to stay afloat.

How can we make this more sustainable in the face of climate change?

There is a world where coffee can be traded more sustainably, but it requires a fundamental shift in how we value it—before it’s too late.  

Consumer behaviour plays a major role in shaping market prices. Education is key—we need to change the mindset around coffee, helping consumers understand why paying more isn’t just about better quality, but about sustainability, fair wages, and the long-term survival of coffee production itself. Climate change is already threatening coffee-growing regions, with rising temperatures, unpredictable rainfall, and increased disease outbreaks reducing yields and pushing farms to higher altitudes. If consumers continue to demand cheap coffee, they are indirectly contributing to an industry that is becoming increasingly unsustainable for those who grow it.  

Large corporations also bear significant responsibility. As long as they continue sourcing coffee at unsustainably low prices while hiding the true costs—climate impact, farmer poverty, deforestation—the industry will remain trapped in a cycle of exploitation.

Stronger regulations and industry-wide commitments to fairer pricing could help prevent these companies from undercutting the value of coffee. If the price of a cup remains artificially low, consumer perception won’t change. But if major players are held accountable and forced to reflect the real cost of production, we can start shifting expectations toward a more sustainable model.  

Finally, those of us within the specialty coffee industry must continue to educate, advocate, and lead by example. Transparency in sourcing, prioritising fair pricing, and supporting regenerative farming practices are crucial to protecting coffee’s future.

Sustainability isn’t just about better trade—it’s about ensuring that coffee remains viable in a world where climate change is making its cultivation increasingly difficult. If we don’t act now, we may soon find that the coffee we know and love is no longer available at any price.

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