Coffee prices continue to spike as global demand grows and supplies lag; China is driving increases

In what many would describe as a total buzzkill, coffee prices are increasing around the globe. "Since January 2021, U.S. coffee importers – which supply 99.6% of the coffee consumed in the U.S. have faced escalating costs for the commodity. Import prices jumped 65% between 2021-23, making a serious impact on consumer prices," reports Billy Roberts for CoBank. U.S. consumers have responded to the steep increases by purchasing fewer beans. Ground coffee sales volumes have declined 10.1% since 2022 and 15.7% since 2021.

While U.S. and European coffee sales remained level through the pandemic years and are now stagnant or dipping, world consumption has steadily increased. "Consumption in Asian countries has jumped 14.5% since 2018, as coffee has become a much more common beverage choice," Roberts explains. "China is playing the lead role in driving the world's coffee demand growth. Servings in China were up 15% Year-over-Year as of May 1 . . .  according to Circana."

Producers would usually welcome an increase in worldwide coffee drinkers, but many continue to deal with supply-line challenges and lower yields. "Droughts, frost and fires in Brazil have damaged as much as one-fifth of arabica coffee producers' growing areas, and frost and below-average rainfall continues to hamper progress," Robert reports. "Colombia has yet to fully recover its pre-Covid share of U.S. exports. . . . Colombian coffee yields continue to trend lower, likely the result of growers opting to limit fertilizer as its price spiked."

Considering demand increases and lagging supplies, coffee prices are expected to remain volatile. "The Bureau of Labor Statistics data find prices for U.S. imports of coffee fell 2.6% from May 2022 to May 2023. Yet, even with the drop, U.S. prices remained substantially ahead of their 2021 levels: 57% higher in May 2023 than in May 2021," Roberts notes. "Global crop concerns have pushed up prices of both arabica and robusta (the two major types of coffee Americans consume)."