The global coffee market is currently experiencing unprecedented volatility, with New York Arabica coffee prices reaching all-time highs. On February 10, 2025, Arabica futures rose to $4.30 per pound, marking the 13th consecutive session of record prices. However, just yesterday, prices fell to $3.86 per pound, breaking the $4 barrier in a single day. This volatility is primarily attributed to adverse weather conditions in Brazil, the world’s leading coffee producer, where dry and hot weather has significantly impacted coffee-growing regions. As a result, Brazilian farmers are hesitant to sell their limited supplies, further exacerbating the global shortage.
In response to these global market dynamics, the Ethiopian government has implemented a minimum coffee price directive aimed at protecting local producers and ensuring that as many dollars as possible flow into the economy. This policy requires Ethiopian coffee exporters to sell at or above a predetermined minimum price, which is adjusted weekly based on international market trends and the prevailing exchange rate.
These developments have important implications for European coffee importers. Rising global Arabica coffee prices directly influence Ethiopia's minimum export prices, leading to higher costs for specialty coffee imports. As importers, we will need to adjust our pricing strategies to accommodate these increased procurement costs.
One effective strategy is to maintain strong relationships with Ethiopian producers. Collaborating closely with exporters can provide better insights into price movements and help secure favourable long-term agreements. Furthermore, it’s essential to recognize that the current price increase is a unique, temporary situation and does not reflect the long-term reality of the coffee market. Therefore, we believe that in the medium term, prices should stabilize again between $3.00 and $3.30 per pound.
One effective strategy is to maintain strong relationships with Ethiopian producers. Collaborating closely with exporters can provide better insights into price movements and help secure favourable long-term agreements. Furthermore, it’s essential to recognize that the current price increase is a unique, temporary situation and does not reflect the long-term reality of the coffee market. Therefore, we believe that in the medium term, prices should stabilize again between $3.00 and $3.30 per pound.
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