Robusta coffee futures in London hit $4,844 a tonne on July 9, up about 70 percent over the past year and a 13-year high, due to poor harvests in the world’s main coffee-growing countries in Southeast Asia.
Coffee prices on supermarket shelves in the UK, which have risen by around 15% this year, could rise by almost 10% next year, said Giuseppe Lavazza, chairman of Lavazza Group, the Italian coffee company.
“Coffee prices are not going to go down and will remain very high. The coffee chain is under a lot of pressure,” he said at an event on the sidelines of the Wimbledon tennis tournament.
Coffee roasters like Lavazza have been forced to raise prices and reduce profit margins due to rising raw material costs, Lavazza said.
The industry is used to volatile prices for premium arabica beans — New York futures are at their highest since September 2022. But the recent surge in robusta prices is unprecedented and poses more problems for the industry.
“Climate change has affected production in most of the world’s major robusta growing countries, primarily Vietnam and Indonesia, significantly reducing the availability of these coffee beans.”
Weather forecasts suggest the next harvest in Vietnam – the world’s top robusta coffee producer – will not be able to replenish dwindling supplies of robusta beans, used to make espresso and instant coffee.
Whereas in the past roasters had to pay a premium for robusta coffee for just a few months or even a year, now they have to pay a lot of money for coffee over many months.
As supply dwindled and prices rose, hedge funds and other speculators piled into the market, which Mr. Lavazza blamed for pushing futures prices even higher. He said the rising futures prices meant the company had incurred an additional $800 million in costs over the past two years.
Higher shipping costs have also helped push up coffee prices. Since last October, ships have been forced to take a longer route around Africa to avoid conflicts in the Red Sea, making it difficult for a coffee company that sources beans from countries in Asia and East Africa.
The Italian coffee maker’s net income is expected to be 68 million euros in 2023, down from 95 million euros in 2022, while profit will fall from 309 million euros to 263 million euros in the same period, he said.
In Vietnam, coffee export prices have skyrocketed since the beginning of 2024, reaching $4,593/ton in June, while output has also decreased over the months.
Meanwhile, domestic coffee prices are around 123,500-124,600 VND/kg. Currently, the average purchase price in the Central Highlands provinces is 124,300 VND/kg, the highest purchase price in Dak Nong province is 124,600 VND/kg.
Vietnam’s coffee supply is in short supply, while speculators have begun to stockpile, so coffee prices in the third quarter are expected to continue to rise. In addition, the decrease in coffee supply from major exporting countries in the world due to weather such as Brazil will cause coffee prices to tend to increase in the coming time, according to the Vietnam Coffee and Cocoa Association (VICOFA).
The above factors are expected to bring “joy” to coffee growers. Compared to the times when coffee prices fluctuated at 30,000 – 40,000 VND/kg in previous years, the current coffee price has tripled and is considered the “golden season” of coffee trees. With high prices, many farmers are excited to increase investment in fertilizers, improve gardens, expand planting areas… to increase output.
