Global Coffee Price Volatility Continues into 2025 – Analysis of Indonesia’s Coffee Plantations, Production and Trade
Coffee, one of the world’s most popular beverages, has remained in the spotlights of international media as global prices (of both the higher quality arabica bean and the lower quality robusta bean) continue to hover near record-high territory in recent months. And as a consequence consumers (especially in coffee importing countries) now have to pay a significantly higher price for their cup of coffee.
Global Arabica and Robusta Prices
What is interesting is that around a year ago when we last analyzed the coffee sector of Indonesia, it were only global robusta bean prices that skyrocketed, while arabica bean prices more-or-less went sideways (albeit also getting a bit of a lift from record high robusta prices).
Back then, in early 2024, robusta prices had reached their highest levels in around 45 years amid tightening robusta bean supplies as coffee harvests in Vietnam, which is the world’s biggest robusta producer, were disappointing in the 2023-2024 period after El Nino had brought prolonged dry weather to Southeast Asia.
The case of arabica coffee beans was different as arabica is especially grown in South America, whereas robusta is particularly grown in Southeast Asia. And, when we talk about South America, then it is particularly Brazil that has an enormous influence on the international coffee market. Last year, Brazil, which is the world’s biggest coffee producer, was responsible for more than a third of global coffee production.
After Brazil experienced a tough 2020-2021 in terms of coffee bean production due to a harsh drought and freak frost, it started to produce more and more coffee beans in the years thereafter. In fact, production was very strong in the 2022-2024 period, which was actually an anomaly for Brazil as the country usually experiences a weak coffee production year after having experienced a good one, with the reason being that Brazil is largely dependent on arabica. Contrary to robusta trees, arabica trees typically produce less in the year following a good harvest. And therefore, good and weak years succeeded one another.
A couple of factors helped Brazil to produce more coffee beans in 2022-2024. Firstly, the country produces more and more robusta beans (and typically the robusta beans show less volatility in production figures). Second, rising coffee output is supported by Brazil’s further improving farming techniques (such as pruning and better use of irrigation, especially at robusta coffee plantations, to better cope with dry weather).
However, in 2024, this situation started to change as Brazil experienced its hottest year on record as well as a record number of forest fires and irregular rainfall, hence affecting its coffee production. Therefore in early February 2025, the arabica futures soared to their highest-ever levels, reaching USD $4.41 per pound (one pound being equal to approximately 0.45 kilograms). What this means is that arabica bean prices doubled in the time span of one year only, sending many roasters and traders into a frenzy as they reworked budgets to secure coffee shipments for the months ahead.
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