Why are arabica coffee futures at a multi-year high?

New York arabica coffee futures broke through $3.1280 per pound, a record since 1997, while robusta futures touched $5,327, a high not seen since the 1970s. Brazil's worst drought in 70 years, followed by heavy October rain, plus port congestion and Red Sea disruption, pushed supply chain costs up and lifted global bean prices.

The move has reached shelves. Ajinomoto AGF will raise prices on 172 coffee products by 15% to 30% starting next March and adjust some stick coffee capacities, while Starbucks Korea, Smucker's, Lavazza, and Nestlé have also made adjustments. Where do arabica coffee beans come from matters here, since Brazil's output shapes the futures market that sets the baseline for retail pricing.

Recently, global coffee bean prices have continued to soar, with New York Arabica futures once breaking through $3.1280 per pound, setting a record since 1997; Robusta futures also hit $5,327, reaching a new high since the 1970s. Extreme weather, port congestion, and turmoil in the Red Sea have together driven up supply chain costs. Affected by this, Ajinomoto AGF has announced that starting next March, it will raise prices on 172 of its coffee products by 15% to 30%, and adjust the capacity of some stick coffee products. Brands such as Starbucks Korea, Smucker's, Lavazza, and Nestlé have also successively adjusted prices. This article will outline the core data of this round of price increases, the underlying causes, and the response measures of major companies, and include recommendations from the Front Street brand.

▲

Click to follow | Daily specialty coffee culture magazine Coffee Workshop

Recently, the sharp rise in global coffee bean prices has attracted industry attention.

On November 25, Arabica coffee futures prices on the New York market rose 1.54% to $3.0995 per pound, having surged to $3.1280 during the day, setting a new high since 1997. As of November 27, U.S. C-type coffee futures were quoted at $3.2615 per pound, up 4.49% from the previous trading day. At the same time, driven by concerns over dry weather, Robusta coffee futures rose 2.63% to $5,116, after earlier touching $5,327, a price that also set a new high since the 1970s.

It is understood that this round of price increases is mainly attributed to Brazil suffering its worst drought in 70 years in August and September this year, followed by heavy rains in October. The continuation of dry weather will directly affect the supply of coffee beans, thereby pushing up prices in the global coffee market. In addition, port congestion and turmoil in the Red Sea region disrupting the global supply chain are another factor causing the surge in coffee bean prices.

Coffee beans have become more expensive, and coffee products on the market have also seen corresponding price increases.

Recently, Ajinomoto AGF Co., Ltd. announced that starting March 1 next year, it will raise prices on multiple coffee products under its brand, including stick coffee, instant coffee, drip bag coffee, capsule coffee, and other regular products, totaling 172 items. Starting March 3, 2025, the brand will adjust the capacity of 17 types of stick coffee, expected to reduce it by about 10% to 12%. In addition, the price increase is expected to be 15-30%.

It is reported that AGF is the coffee subsidiary of the famous Japanese food company Ajinomoto. Founded in 1954, it is Japan's second-largest coffee brand, with sales and reputation second only to UCC. Thanks to the "T2 ACMI Roasting®" coffee-making process, AGF was among the first coffee companies to develop and produce espresso liquid and is very famous in the field of espresso liquid. Ajinomoto AGF's main coffee brands include Blendy, Maxim, marim, among which the Blendy series products will be included in this price increase.

Regarding the reason for the price increase, Ajinomoto AGF said the main reasons are the exchange rate impact brought by the depreciation of the yen and the high procurement prices of raw materials, mainly coffee beans, which have led to rising manufacturing costs, making it difficult for the company to absorb the full impact of the costs.

In fact, as early as this summer, the rise in coffee bean futures prices had already gradually spread to the consumer end.

For example, Starbucks Korea announced a coffee price adjustment in July, stating that starting August 2, the prices of grande (473 ml) and venti (591 ml) beverages would increase by 300 won ($0.22) and 600 won ($0.44), respectively, while the prices of all tall beverages would remain unchanged. Regarding the reason for the increase, the company said at the time, "The market factors driving up coffee prices have matured, but due to continuously soaring costs, a price increase is unavoidable."

In addition, U.S. food and beverage giant Smucker's also said in June that it would raise the retail prices of some instant coffee products starting this summer; Italian coffee manufacturer Lavazza also said in a media interview that due to soaring raw material costs, it was forced to raise prices and lower profit margins; in order to ease the pressure on profitability brought by rising coffee bean costs, Nestlé issued a product price increase plan last month.

Disclaimer: Some images in this article are from the internet. For some content on the website, such as images, we will respect the original author's copyright and indicate the source. However, due to the large quantity, some images and texts may not have been credited in time. Please understand. If the original author has any disputes, they can contact the website for handling. Once verified, we will correct it immediately. Compiled and edited by "Coffee Workshop." Please indicate the source when reposting. If there is infringement, please inform us for deletion. Thank you~!

The above content is compiled by CoffeeHunters, a coffee news website.