Americans can expect the price of their daily cup of java to stretch their wallet a bit more than usual as a litany of factors impacting the global supply chain result in rising prices.
In February, wholesale arabica coffee prices shattered its previous record at $4.30 a pound – double the price from last year – according to futures contracts traded in New York.
Now, coffee roasters who took their chances in the futures markets are feeling the burn, and could pass the price off to customers. Traditionally, companies invest in the futures market in hopes of securing a lower cost, but coffee prices just keep climbing.
In February 2025, the average price of ground roast coffee rose to a record high of $7.25 a pound, according to government data.
BUSINESSES MAY HAVE TO PASS HIGH BEEF PRICES ON TO CONSUMERS
For an industry that sees a majority of its revenue coming from products consumed at home, the idea that customers are less likely to seek out a substitute for coffee allows companies to have more flexibility in their prices while offsetting the cost to the consumer.
“At the end of the day, we have to be responsible,” J.M. Smucker CEO Mark Smucker said in a November earnings call. “We want to make sure that we are able to pass along cost changes both up and down, and we do intend to do that.”
J.M. Smucker did not immediately respond to Fox Business’ request for comment.
Numerous factors – such as tariffs, weather and crop growth – tend to have significant impacts on coffee prices. In 2024, the world’s largest coffee producers saw an influx in climate-related impacts on their crops.
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Green coffee bean exports from Brazil dropped 11.3% in December following a season of severe droughts and frost, according to a report from the International Coffee Organization (ICO). Vietnam’s exports were also down 39.5% after the country saw an unseasonable drought in October.
“I would highlight that the market for coffee today is very speculative, because we haven’t hit harvest season yet,” Smucker said. “A lot of the volatility we’re seeing is really related to financial speculation. As we get into the harvest, we will have more intel in terms of what that looks like.”
Coffee exports from Asia and Oceania also saw a sizable drop in 2024, with a decrease of 31.2% reported by the ICO.
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Geopolitical tensions between Israel and Hamas, and an increase in reported attacks throughout the Red Sea has led to shipping delays impacting a vital maritime route that accounts for 30% of international container shipments, according to a 2024 report from the World Bank.
Additional shipping times through the Suez Canal has also forced coffee-producing countries, such as Asia, to increase their cost, according to a report by the ICO.
Additionally, the U.S. Department of Agriculture has found that China has expanded its countrywide coffee consumption, with Chinese consumers expected to purchase 6.3 million bags of coffee by the end of 2025 – a national record for the world’s most populous country that could put a strain on an already spread-thin supply chain.
“We will continue to pull the levers available to us, whether that’s trade or obviously cost reduction to try to make sure that we don’t take price up too much and [be] very careful to what the consumers can bear,” Smucker said. “But we will be responsible and we will continue to manage the coffee business the way we always have.”
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