Coffee
Coffee is grown by millions of smallholders and priced by two futures contracts. Between those two facts sits every supply shock this market has ever had.
At a glance
- Traded as
- Green coffee beans, arabica and robusta separately
- Quoted in
- US cents per pound for arabica, US dollars per tonne for robusta
- World production
- Roughly 170 million 60-kilogram bags in 2024/25
- Largest producer
- Brazil, close to two fifths of world output
What is actually being traded
There are two commercial coffee species and they are separate markets. Arabica grows at altitude, tastes better, yields less and is far more vulnerable to frost and drought. Robusta grows lower and hotter, carries more caffeine and a harsher flavour, and goes mostly into instant coffee and espresso blends.
They trade on different exchanges in different units - arabica in US cents per pound in New York, robusta in dollars per tonne in London - and the spread between them is a live economic signal. When arabica gets expensive, roasters quietly increase the robusta share of a blend, which transmits the shock across.
What trades is green coffee: unroasted beans, graded by origin, screen size and defect count. Roasting happens near the consumer, which is why the exchange price is only a fraction of what a cup costs.
Arabica and robusta are two markets, not two grades. Roasters substitute between them, which is how a shock in one reaches the other.
What it is used for
Coffee has essentially one use, and demand for it is famously inelastic in the short run: a doubling of the green coffee price barely dents consumption, because the bean is a small part of the retail price of a cup and habits do not respond to commodity markets.
That inelasticity is exactly why supply shocks produce such violent price moves. When demand cannot fall, the entire adjustment has to come from price - the market has to bid until someone somewhere releases inventory.
The slow-moving demand story is geographic: consumption growth now comes from producing countries themselves and from Asia, which removes exportable supply without any change in production.
- Europe
- 30%
- Asia and Oceania
- 24%
- Producing countries, domestic use
- 22%
- North America
- 19%
- Africa and other
- 5%
Source: International Coffee Organization
Where it comes from
Brazil grows more coffee than the next three countries combined and is the swing producer for arabica. Vietnam plays the same role for robusta. Between them they set the direction of the market, and a bad year in either is a world event.
Coffee trees also have a biological quirk that shapes the cycle: many varieties bear biennially, producing a heavy crop one year and a lighter one the next. A smaller harvest is therefore not automatically a shortage - the question is always whether it is smaller than the off-year was supposed to be.
| Name | Share |
|---|---|
| Brazil | 38% |
| Vietnam | 17% |
| Colombia | 8% |
| Indonesia | 6% |
| Ethiopia | 5% |
| Rest of world | 26% |
Source: USDA Foreign Agricultural Service and ICO
Behind the subscription
The rest of this entry is the part that changes a decision: what moves the price, which contract sets it, who ships it and where that can be cut off.
What moves the price
The frost risk that can double this market in a week, the biennial cycle that fools the unprepared, and the six other forces that set coffee.
Where it is traded
The two contracts, their units and delivery, and what the certified stock reports actually tell you.
Who ships it, and where it concentrates
Where coffee goes after the farm gate, and why the roasting step - not the growing step - holds the pricing power.
How this shows up in prediction markets
Which contract settles a coffee question, why the southern winter matters for the deadline, and the stock check that separates a scare from a squeeze.
Included with a subscription
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Frequently asked questions
- What is the difference between arabica and robusta?
- Arabica grows at altitude, tastes better and is far more vulnerable to frost and drought; robusta grows lower, carries more caffeine and goes largely into instant coffee and espresso blends. They trade on different exchanges in different units, and roasters substitute between them when the spread justifies it.
- Why does Brazilian frost matter so much?
- Because it can damage the trees rather than only the current crop, removing supply for several years. That possibility is priced every southern hemisphere winter, whether or not a frost materialises.
- Why does the coffee price swing so violently?
- Demand is highly inelastic - people do not stop drinking coffee when green bean prices double - so the entire adjustment to a supply shock has to come from price. Add concentrated production and it is one of the most volatile agricultural markets there is.
- What are certified stocks?
- Coffee that has been graded and stored in exchange-approved warehouses, available for delivery against futures. The level and its direction are published daily and are the best read on whether a supply scare can become a physical squeeze.
Primary sources
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