Robusta coffee bean prices have recently dropped to their lowest levels in more than a year. This decrease represents a consequential pivot in the monetary and climate market environment. Prices have crashed 40% since their last high mark. This decline is largely due to supply expectations including growth from OPEC, U.S. compensatory growth, and increased U.S. supply not dependent on new drilling. This sudden and steep drop has sent waves of confusion and concern through the ranks of traders and coffee drinkers.
The drop-off in costs arrives as forecasters expect a significant surge in superior quality robusta coffee inventory. According to industry reports, most of the world’s major producing countries are on course to complete a bigger-than-anticipated harvest. Favorable weather conditions and shifts towards more sustainable, precision agronomic practices are contributing factors to this expected increase. These conditions have massively increased productive capacity on both sides of the aisle.
Market observers have warned of increasing pressures in the robusta coffee industry. It is these challenges that have resulted in the recent decline in prices. The resulting potential oversupply, alongside ongoing changes to consumer demand, has brewed a perfect storm for robusta prices. Traders are changing their playbooks as a result of this news, with most expecting more volatility to come in the markets.
In the past few months, there’s been a change in fortunes for the world’s other main coffee species, robusta, which is mainly used by instant coffee manufacturers. The much lower in-use prices would drastically increase a U.S. market demand as manufacturers would rush to take advantage of this cost saving. Robusta beans are more commonly used in instant coffee. Combined, this trend may increase production and purchasing as early as this fall.
The consequences of this current pricing trend go much further than the markets themselves. Coffee farmers and exporters have been keeping a close eye on these fluctuations as they get ready for the fall harvest season. Further, most are reticent to discuss how the continued period of low prices will impact both their livelihoods and their operational choices in the future.