The global coffee market is facing significant turbulence as prices hit a historic high, while exports decline sharply, according to the latest report from the International Coffee Organization (ICO).

The ICO’s Composite Indicator Price (I-CIP) surged to 310.12 US cents per pound in January 2025, marking a 3.5% increase from December 2024 and a staggering 75.8% jump compared to January 2024. This makes it the highest recorded monthly average since April 1977.

The price rally is being fueled by tightening supplies from major coffee-producing countries, particularly Brazil, where both Arabica and Robusta prices spiked by 15.2% and 6.2%, respectively, by the end of January. The price surge has also been linked to shrinking global stocks, with certified Arabica reserves in New York plunging 11.7% compared to December.

Global Coffee Exports Drop by 10.5%

Amid rising prices, global coffee exports are showing signs of strain. Green coffee bean shipments fell by 10.5% in December 2024 compared to the same month in 2023, marking the second decline in the past 14 months.

The sharpest drop came from Robusta exports, which plummeted by 19%, driven largely by Vietnam’s steep 39.5% decrease. This decline is particularly concerning as Robusta is a key ingredient in instant coffee and espresso blends, raising concerns over supply shortages.

Similarly, Brazilian Naturals—a category dominated by Brazil—saw an 11.3% drop, while Other Milds, which include coffees from Honduras, Papua New Guinea, and Peru, recorded a 12.3% decline.

Colombian Milds, however, defied the trend, surging 32% in exports, largely due to strong production gains in Colombia, Kenya, and Tanzania. Colombia’s coffee output in December alone rose 47%, reflecting a robust recovery.

Regional Export Trends Show Contrasting Fortunes

Export patterns varied significantly across regions:

• Asia & Oceania: The hardest hit, with shipments plummeting 31.2%, mainly due to Vietnam’s supply crunch.
• Africa: A rare bright spot, with exports climbing 8%, led by Ethiopia, Kenya, and Tanzania.
• South America: Down 2.1%, marking the first decline in 16 months, despite Colombia’s strong performance.
• Mexico & Central America: Barely positive, rising just 0.9%, as Honduras suffered a staggering 59.5% drop in exports.

The decline in Vietnam’s exports is particularly alarming, as it suggests tight domestic supply and potential production setbacks. Analysts warn that if supply shortages persist, global Robusta prices could continue to soar, pushing costs higher for coffee roasters and manufacturers.

Economic and Trade Uncertainties Weigh on the Market

Beyond supply issues, the ICO report also points to geopolitical and economic factors influencing the coffee market.

• Uncertainty in U.S. trade policies has cast doubt on export conditions for Brazil, India, and Indonesia, key coffee-producing nations.
• European Central Bank signals of possible interest rate cuts could stimulate demand, further pushing prices upward.

Meanwhile, the price gap (arbitrage) between Arabica and Robusta widened to 94.6 cents per pound, its highest level since October 2022, reflecting growing market instability.

Outlook: Coffee Market Faces an Uncertain Future

With Arabica prices at historic highs and Robusta supply shrinking, the coffee industry is entering a period of extreme volatility. Much will depend on Brazil’s upcoming harvest and how global economic conditions unfold.

For now, roasters and coffee buyers face mounting pressure, as rising costs may soon be passed on to consumers. If the current supply and demand imbalances persist, coffee lovers could see higher prices at cafés and supermarkets worldwide.

Final Thoughts

The ICO’s January 2025 report paints a picture of a coffee market in transition, driven by supply constraints, economic uncertainty, and shifting trade patterns. The coming months will be crucial in determining whether the current price surge is a temporary spike or the start of a prolonged high-cost cycle for the coffee industry.