Robusta Prices: In recent years, many coffee traders and roasters have undoubtedly observed a steady rise in robusta prices. By October 2021, Increased demand the price had hit a decade high, largely due to global shipping container shortages, marking the sixth consecutive year of price increases.
Robusta prices: By June 2023, the International Coffee Organization reported that the average price of robusta had surged by 7.8%, reaching 132.12 US cents per pound, which was the highest level in 28 years.Increased demand As of late January 2024, prices have continued to climb each week, now standing at their highest in 29 years.
It’s clear that robusta prices aren’t expected to drop soon. With growing interest in high-quality robusta, is the price surge solely driven by increased demand, or are there other contributing factors? And what could this mean for the coffee industry as a whole?
Robusta prices: To gain insight, I spoke with Sahra Nguyen, CEO and founder of Nguyen Coffee Supply, and Ryan Delany, founder and chief analyst at Coffee Trading Academy.
Reasons Behind the Surge in Robusta Coffee Prices
The price of coffee, whether arabica or robusta, is mainly influenced by supply and demand. When coffee supplies are limited, an increase in demand will naturally push prices higher.
Robusta prices: Although demand for robusta has certainly grown, especially with its rising use in specialty coffee blends, the current near-record prices are driven by more than just demand.
Ryan Delany, with 14 years of experience in green coffee trading, sheds light on why robusta prices have reached a 29-year high. He points to **supply shortages** and **increased demand**, which are being worsened by **transportation issues in East Asia**.
As of 30 January 2024, robusta coffee inventories monitored by the Intercontinental Exchange dropped to an all-time low of 2,996 lots. The main factors behind this include:
– **A 47% increase in Vietnam’s coffee exports**, despite being the world’s largest robusta producer.
– **Severe dry conditions in Brazil**, the second-largest robusta producer, affecting harvests.
Additionally, the **Red Sea crisis** is severely disrupting global trade routes, particularly affecting shipments from Vietnam and Indonesia to European markets. Roasters now face either extended shipping times or increased costs due to higher insurance premiums and intense competition for shipping containers.
“With limited supply in the open market, traders are turning to certified stocks and Brazilian conilons, which has led to declining certified robusta stocks and increased shipments from Brazil,” Delany explains.
How Supply Constraints and Growing Demand Lead to Price Increases
Robusta prices: Navigating the complexities of trading economics can be quite challenging, especially given the fluctuating prices of coffee. It’s essential to understand the reasons behind these price hikes.
Sahra Nguyen, the founder of Nguyen Coffee Supply, the first specialty Vietnamese coffee importer and roaster in the US, explains the situation.
There are numerous factors contributing to the rise in robusta prices, such as shortages caused by droughts, which will elevate prices as demand increases,” she notes. “Furthermore, climate-related issues affecting arabica production will likely boost demand for robusta, as roasters look to diversify their product lines.
Additionally, trading dynamics on the Intercontinental Exchange (ICE) influence prices based on supply and demand,” Sahra adds. “If a company predicts ongoing shortages, they might choose to secure their inventory sooner, which can also lead to higher prices.
The Quality of Robusta Coffee is Continuously Improving
As mentioned, attributing the rise in robusta prices solely to increasing demand is overly simplistic, especially considering the impact of conflicts in the Red Sea on global trade routes.
Robusta prices: However, it’s important to recognize that high-quality robusta, often referred to as “fine” robusta, is gaining significant popularity, which is contributing to rising prices.
“The improvement in robusta quality is a result of reaching a pivotal moment in the global coffee industry. We are now able to broaden discussions around sustainable farming practices, drive innovation in robusta research and production, and invest in the communities that cultivate robusta, which have historically been marginalized and economically exploited,” Sahra explains.
“Robusta quality is on the rise as we implement many techniques and practices typically associated with producing high-quality arabica. This includes adopting organic farming methods, ensuring ripe cherry harvesting, and experimenting with various post-harvest processing techniques like anaerobic fermentation, fully washed, and honey processing,” she adds.
The Significance of Blends in Coffee Production
In recent years, many brands, especially larger multinational roasters, have begun to increase their sourcing of robusta coffee. This trend is primarily driven by the desire to incorporate robusta into blends, which have gained prominence in specialty coffee as roasters seek to navigate rising costs and inflation.
Robusta prices: Additionally, the perception that single-origin coffees are inherently superior to blends is starting to change. An increasing number of roasters are embracing the idea that blends can provide consistent and repeatable flavor profiles, resulting in a more balanced and versatile coffee compared to what a single origin can offer.
Notably, we’ve seen baristas at prestigious competitions utilize blends in their presentations. For instance:
**Boram Um**, the 2023 World Barista Champion, crafted a milk beverage using a blend of anaerobically fermented Gesha and natural Pink Bourbon.
**Daniele Ricci**, the runner-up, created a blend featuring Colombian Gesha and Caturra from the same farm.
**Takayuki Ishitani**, who placed fourth at the 2022 World Barista Championship, showcased a blend of robusta and anaerobically fermented Gesha.
While it may still be early to see single-origin robustas in specialty coffee shops, the growing focus on blends suggests that the demand for robusta will continue to rise.
Robusta prices: Sahra emphasizes, “Although there are similarities between arabica and robusta, it’s crucial to recognize that they are distinct coffee species, each with unique characteristics. This means they require tailored approaches for optimal flavor experiences. In essence, robusta should not be grouped with arabica when it comes to production, processing, roasting, or consumption.
What Lies Ahead for the Coffee Industry?
It’s unlikely that robusta prices will experience a significant drop in the near future for several reasons. According to the latest coffee market report from the International Coffee Organization (ICO), certified robusta stocks fell to 0.48 million 60kg bags between December 2023 and January 2024, marking a 15.4% decrease.
What implications might this have for the broader coffee industry?
“Robusta serves as a cost-effective alternative for many roasters, and with arabica prices remaining consistently high over the past couple of years, this has been a major factor driving robusta demand,” Ryan explains. “As the robusta market rallies, the arbitrage is returning to historical levels, around US 40 cents.” For context, arbitrage refers to the practice of simultaneously buying and selling commodities in different markets to profit from price discrepancies.
“This shift makes robusta a bit less appealing, leading some roasters to consider lower-quality arabicas instead,” Ryan adds.
Increasing Investment and Interest in Robusta Coffee
While not all specialty coffee roasters are eager to source robusta, the continuous improvement in quality is leading more of them to become receptive to it.
“The increasing presence of robusta in specialty coffee marks an exciting period for exploration, innovation, and new experiences,” Sahra explains. “Roasting, brewing, and enjoying robusta provide a distinctly different experience compared to arabica.”
Having roasted robusta for five years, she has observed a growing number of roasters seeking advice, as robusta requires a unique roasting approach compared to arabica.
Additionally, with organizations like World Coffee Research taking an interest in robusta, investing in this coffee type is crucial—not only to support robusta producers but also to enhance recognition of their contributions.
“We seem to be entering a new era of exploration and discovery, focusing on investment in learning, innovation, and improvement,” Sahra states. “Although robusta has always existed as a coffee species, it has been largely overlooked, leaving a lot of work for our industry to undertake.”
On the production side, with the market finally opening up to high-quality robusta, farmers worldwide have the chance to enhance their coffee quality. This improvement benefits their land and supports their socio-economic sustainability, she concludes.
While there are multiple factors contributing to the near-record high prices of robusta, rising demand is undoubtedly a significant one. Many believe it’s time to fully embrace high-quality robusta.
As the trend of specialty coffee blends continues to expand, robusta holds considerable potential for the future.