January 2025 marks a milestone in the coffee industry as global prices continue their upward trajectory, reaching levels not seen since the late 1970s.
According to the International Coffee Organization (ICO) January 2025 Coffee Market Report, the ICO Composite Indicator Price (I-CIP) averaged 310.12 US cents per pound, reflecting a 3.5% increase from December 2024. This surge has been driven by a combination of tightening supply, rising domestic prices in key producing regions, and growing concerns over global economic uncertainty.
Arabica and Robusta Prices Continue Upward Trend
The report highlights that both Colombian Milds and Other Milds rose by 3.2%, reaching 351.93 and 354.47 US cents/lb, respectively. The Brazilian Naturals also saw an increase of 3.7% to 339.18 US cents/lb, while Robusta prices climbed 3.6% to 245.29 US cents/lb.
A significant driver of this trend has been the price escalation in Brazil, the world’s largest coffee producer. The Brazilian Ministry of Agriculture, Livestock, and Food Supply (Conab) revised its 2024/25 coffee supply estimates downward by 600,000 bags, adding further pressure to the market.
Exports Face Declines Across Key Regions
The global coffee supply chain is experiencing notable disruptions, with green coffee exports declining by 10.5% in December 2024, totaling 9.73 million bags, compared to 10.87 million bags in December 2023.
- Robusta exports suffered the largest decline, dropping 19.0% to 3.71 million bags.
- Brazilian Naturals exports declined by 11.3%, amounting to 3.34 million bags.
- Other Milds shipments fell by 12.3%, down to 1.28 million bags.
In contrast, Colombian Milds exports saw a significant increase of 32.0%, rising to 1.39 million bags. The surge was supported by stronger production in Colombia, Kenya, and Tanzania, with Tanzania’s exports witnessing a 170.6% increase.
Regional Trade Fluctuations Reflect Market Struggles
Export data for December 2024 underscores a divergence in performance across coffee-producing regions:
- Asia & Oceania recorded the sharpest decline, with exports plummeting by 31.2% to 3.31 million bags. Vietnam, the largest Robusta producer, faced a 39.5% drop in exports to 2.0 million bags, its lowest level since December 2014.
- South America’s exports declined by 2.1%, totaling 5.6 million bags, with Brazil witnessing its first negative growth in 16 months.
- Africa was the only major region to register growth, expanding by 8.0% to 1.21 million bags. Ethiopia, Kenya, and Tanzania were the primary contributors to this increase.
- Mexico & Central America saw a slight 0.9% increase, driven by Guatemala, Costa Rica, Mexico, and Nicaragua, despite a 59.5% decline in Honduras’ shipments.
Market Volatility and Futures Trading Trends
Despite the price increases, the intra-day volatility of the I-CIP decreased by 2.8 percentage points to 11.3% in January 2025. The arbitrage between the New York and London futures markets widened by 4.3%, reaching 94.60 US cents/lb, its highest level since October 2022.
The futures markets in New York and London reflected the ongoing bullish sentiment, with the New York ICE market rising by 3.8% to 328.94 US cents/lb, while the London ICE market climbed 3.6% to 234.33 US cents/lb.
Outlook for 2025: Supply Challenges and Economic Factors
The coffee industry faces mounting supply challenges, with declining stock levels and climate-related disruptions affecting key producing regions. The certified stocks of Arabica coffee dropped by 11.7%, reaching 0.91 million 60-kg bags, while Robusta stocks in London increased by 3.8% to 0.76 million bags.
Adding to market uncertainty, global economic policies and trade regulations could impact demand dynamics. The European Central Bank’s potential interest rate cuts and the U.S. administration’s ongoing trade reviews may influence coffee trade flows in the coming months.
As coffee prices continue their ascent, industry stakeholders remain cautious, monitoring production forecasts, export trends, and macroeconomic shifts that will shape the global coffee market in 2025.