Global coffee trade slows as soaring prices shake industry

• Published On: 08 March 2025 at 17:31

Global coffee traders and roasters said they have significantly reduced their purchases as rising prices strain the industry, while suppliers struggle to persuade retailers to accept higher prices.

At this week's United States National Coffee Association convention in Houston, attendees were taken aback by a 70% increase in Arabica coffee futures on the ICE exchange since November.

Renan Chueiri, Director General of ELCAFE C.A. in Ecuador, stated that, for the first time, the company had not sold its entire expected annual production by March.

"We would usually be sold out by now, but so far we sold less than 30% of production," he informed me. "The big price increase eats clients' cash flow, they don't have all the money to buy what they need."

Rising coffee prices are being driven by lower production in key growing regions, particularly Brazil, the world's largest producer, resulting in reduced bean availability.

"Nobody wants to be exposed, no one is buying for future delivery, it's all hand to mouth," said a coffee broker who asked to remain anonymous due to the sensitivity of the issue.

He pointed out that many recent transactions in Brazil have been handled with extreme caution.

"After you close a deal, you have seven days to go to the farm or warehouse and pick up your coffee. You check the quality, and if it's satisfactory, you pay on-site and drive away with the coffee."

A Reuters poll predicts a 30% drop in Arabica coffee prices by year-end, owing to weaker demand and expectations of a strong Brazilian crop next year.

Until then, the industry faces difficult times.

According to the CEO of a major U.S. roaster in the world's largest coffee market, some clients are concerned about their ability to continue doing business.

"They don't know if they will be able to sell their product at the new prices," he said, declining to be identified. "Some people are going down" .

The CEO stated that supermarkets and grocery stores were resisting higher prices from roasters, resulting in prolonged negotiations and some retail outlets experiencing coffee shortages.

"It has been a nightmare," he added.

According to a storage industry executive, US coffee warehouses near ports that handle beans from Central and South America are only half full.

"Some storing companies are returning silos to the owners, canceling leasing contracts early," he pointed out.