Coffee

Coffee is one of the most traded soft commodities. It is grown in tropical regions, mainly by smallholder farmers, and consumed everywhere. Two species dominate: arabica, prized for flavour, and robusta, hardier and higher in caffeine, often used in instant coffee and blends. Brazil is the largest producer of both arabica and coffee overall, and Vietnam is the largest robusta producer. Coffee prices are famously volatile because of weather risk in a few key growing regions, currency moves and the slow response of supply.

The contracts#

A 10 cent move in arabica is $3,750 per contract.

Where coffee comes from#

Brazil's arabica trees often follow a two year cycle of higher and lower yields ("on year" and "off year"), which affects supply estimates.

What moves coffee prices#

Price history#

• 1975: a severe Brazilian frost caused a historic price surge.
• 1994: frosts again sent prices sharply higher.
• 2001 to 2002: prices fell to multi decade lows, causing hardship for farmers.
• 2024 to 2025: arabica and robusta both reached record highs after poor harvests in Brazil and Vietnam and low inventories, with arabica rising above $4 a pound in early 2025.

From farm to cup#

Coffee cherries are picked, processed (washed or dried), and the green beans are graded, bagged and shipped to roasters around the world. Exchange certified stocks must meet strict quality standards, so ICE inventories show how much deliverable high quality coffee is available. When certified stocks fall to multi year lows, as they did in 2022 and 2024, nearby futures can rise sharply relative to later months. See Storage and Inventories.

Trading coffee#

• Outright futures and options on ICE.
• Arabica versus robusta spread: reflects quality premiums and relative supply.
• Calendar spreads: tight supply shows up as backwardation. See Backwardation.
• Weather and crop tour based analysis in Brazil and Vietnam.
• Currency awareness: watch USD/BRL. See Currency Pairs: Majors, Minors and Exotics.

Risks#

• Weather shocks in concentrated regions.
• High volatility: daily moves of several percent are common.
• Liquidity is lower than in major grains or energy.
• Quality and grading details in physically delivered contracts. See Physical Delivery vs Cash Settlement.

Frequently asked questions#

What is the difference between arabica and robusta coffee?#

Arabica is milder and more flavourful, grown at higher altitudes, while robusta is hardier, more bitter and higher in caffeine, used often in instant coffee.

Why are coffee prices so volatile?#

Production is concentrated in a few countries, weather events like frost and drought can damage trees for years, and currency moves affect farmer selling.

How do Brazilian frosts affect coffee prices?#

Frost can damage trees and reduce output for several years, often causing sharp price rallies.

Next, learn about sugar, another key soft commodity, in Sugar.