Welcome to our latest edition of Market Watch! Andrew Blyth & Tom McLaughlin are here to provide you the latest insight into the continuously high coffee “C” market price and more as of December 2024.

Coffee Prices Surge

Coffee prices, as measured by the ICE KCH’25 futures contract, saw an extraordinary surge higher during the month of November. Prices traded as low as $2.4080/lb. on November 1st and moved dramatically higher, reaching a 47-year high on November 29th of $3.3545 before settling that day at $3.1805. Coffee market observers have witnessed dramatic price moves and volatility in years past, but to see prices move almost 40% higher in one month without a cataclysmic weather event in Brazil is unheard of.

Weather Impacting High Coffee Price

Drought conditions and higher-than-normal temperatures in Brazil’s coffee-growing regions beginning in spring and summer of this year have many concerned that the coffee trees are stressed from these weather issues and that the next crop (May 2025) could be impacted. The coffee market has seen supply issues throughout the past few years. Vietnam, the largest producer of robusta beans, had weather-related issues in 2023 and 2024 which helped keep coffee prices at historically high levels throughout 2024. To the concern of all in the importing and roasting trade: how high can these prices go, and when will this market correct to a more manageable level? We will continue to monitor the development of this next Brazil crop as this will greatly influence where prices go.

Coffee Market Imbalance

Another important factor recently reported is the general imbalance of this market. While the market rose consistently throughout the majority of 2024, roasters small and large waited on the sidelines for the market to do what historical data has told us it would do; have a correction lower. This lack of participation for months has left most roasters with a sizable need to contract and price fix nearby green inventory. The lack of forward “fixed price inventory” is adding to the near-term upside potential of the market and could influence prices higher in the short term.

What does a continuously high coffee price mean for you?

Where prices go from here is really anyone’s guess as we are in uncharted territory, and most market participants agree that this market increase was too fast, too soon. The real challenge is figuring out what to do next. The unpopular reality could be an industrywide price reset should the market stabilize at higher levels or continue to climb. As we navigate forward in an unpredictable market, we may face yet another disruption with East Coast port workers potentially striking for the second time on January 15th, 2025. Given these uncertainties, we recommend reserving and price fixing coverage for instore or nearby arrival coffee through March 2025. This strategy can provide peace of mind if prices rise, and if they fall, you’ll only be three months away from averaging your prices down.

Whatever this market has in store for us, this is the time to talk to your traders and know what supply or or pricing challenges could lie ahead. At Royal New York, we’ve been importing coffee for 30 years and have been in the industry for generations. Leverage our expertise to navigate these challenges—finding solutions is what we do best.

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