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Coffee Bean Prices Soar to New Highs on Asia’...

Coffee Bean Prices Soar to New Highs on Asia’s Expanding Middle Class

TOKYO — Global coffee bean futures are near record or recent highs, fueled by increasing demand from a growing middle class in China and the rest of Asia while some major producers appear headed for poor harvests.

London robusta coffee futures, an international benchmark for the type of beans used mostly for instant coffee, hit $3,497 per tonne at one point on March 7 for an all-time high. Prices have remained high, closing at $3,421 on Tuesday.

New York Arabica futures, the benchmark for the higher-quality beans used at cafes, also reached their highest price in 14 months during December. Trading on Monday closed at 181.85 cents per pound, up 24% from the end of September.

Vietnam, the largest producer of robusta, is expected to provide 26.6 million 60-kilogram bags of the beans in the 2023-24 year that began in October, the U.S. Department of Agriculture said in a December report. That figure is down 12% from the USDA’s forecast in June.

The new forecast echoes the record-poor 2022-23 harvest, which yielded 26.3 million bags. Output in Indonesia, the world’s third-largest producer, is projected to be down by 20%.

In addition to unfavorable weather like high temperatures and drought in Southeast Asia caused by the El Nino phenomenon, some farmers are switching to crops that can be produced more stably, including rubber and durian.

“There are cases where farmers are unable to fulfill contracts with export companies due to a lack of supply,” said an assistant manager of coffee and beverages at Japanese importer S. Ishimitsu.

Robusta beans are cheap compared with Arabica.

“Some retailers are replacing Arabica with robusta in an effort to avoid soaring retail prices,” said Taisuke Horie, a beverage department manager at trading house Marubeni. “Increasing demand is squeezing robusta supply, leading to higher prices.”

Global consumption of coffee beans in 2023-24 is to increase 20% from 2013-14, with notable growth in Asia. Consumption in heavy producing countries Vietnam and Indonesia is up 60% and 90%, respectively, over the same span, the USDA reports. China, the world’s seventh-largest coffee consumer, is seeing a 130% increase.

Coffee exports from Brazil, the largest Arabica bean producer, to China in January and February rose 160% on the year, the Brazilian Coffee Exporters Council reports. The increase surpasses that of exports to larger coffee-consuming countries like Japan, to which exports climbed 87%, and the U.S., which saw a 37% increase.

“In Asia, coffee was largely a luxury product for wealthy people, but with population growth and economic development, the middle class has expanded, and the number of people who enjoy it on a daily basis has increased,” Horie said.

As of December, China had surpassed the U.S. to have the most coffee chain stores globally, U.K. research firm World Coffee Portal reports. Chains originating in China are also expanding rapidly worldwide. Cotti Coffee, founded in 2022, has more than 7,000 stores globally and expanded into Japan in 2023.

Rising futures prices are also impacting consumer prices in Japan. Ajinomoto AGF will raise prices on some instant coffee products by 20% to 25% starting April 1.

Source: NIKKEI Asia 


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