MILAN – The coffee futures markets followed opposite trends in the last session of the week, with a slight decline in New York and partial recovery in London. On Friday, 21 March 2025, the rally in the dollar index to a 2-week high had a negative impact across the commodity markets, including coffee. The May ICE Arabica contract lost 0.75% to close at 391.40 cents.
On the other hand, ICE Robusta’s main (May) coffee futures contract gained $18 to close at $5,515, up slightly on news from Vietnam, where weather forecasts from the Dak Lak province predict dry and very hot conditions until the end of the month.
Coffee consumer markets around the world are experiencing generalised price increases, both in retail and away-from-home. In the UK, the £5 cup of coffee may soon become the norm.
According to Jeffrey Young – CEO and founder of Allegra World Coffee Portal, a market research company specialising in the coffee sector – it is only a matter of time.
“Here we are now talking about the £5 cup of coffee. Realistically, for the average consumer, it’s two or three years away, but for many it is the reality now,” said Young in an interview with the BBC.
Paul Rooke – executive director of the British Coffee Association – pointed out that the beans are only part of the equation, with increasing energy, labour and business costs for cafe owners also pushing up prices.
The coffee companies that bet on falling prices last year have been proven wrong, and they are now forced to pass on the higher costs to consumers, reports Bloomberg in an analysis.
Companies that typically take positions in the futures market to protect themselves from price fluctuations changed course when prices began rising last year, hoping they could secure a better deal later.
But supply shortages persisted and prices kept climbing, leaving companies from JDE Peet’s NV to Starbucks Corp no option but to raise prices, says Bloomberg.
Average prices for a pound of ground roast coffee reached a record $7.25 a pound in February, according to data from the US Bureau of Labor Statistics, reported by Bloomberg.
But the entire supply chain is currently under stress. Coffee roasters are living hand-to-mouth, buying the bare minimum to get by. Cash-strapped traders are also struggling to finance the transport of beans from where they are produced to where they are consumed.
Meanwhile, smaller to mid-size roasters, meanwhile, are continuing to stay away from the futures market.
Tomas Araujo, a trading associate at StoneX Group Inc., said roasters are waiting for the market to take a leg lower before putting on new hedges. “The issue is, I’m not really sure if we’re going to get there,” he said in a statement to Bloomberg.
The Melbourne International Coffee Expo (MICE) wrapped up on Saturday 22 March 2025, with record figures. The show saw the participation of 130 exhibitors and 31,708 attendees.
The event will return next year, 26-28 March 2026, again at the Melbourne Convention and Exhibition Centre.
