C–PRICE: Explaining the state of the coffee industry and the drivers of rising prices
The global coffee industry is facing one of its most volatile periods in recent history, driven by the Coffee C Market. Lets unpack how it works and the drivers behind why coffee prices are currently near all-time highs.
What is the “C Market”?
The C Market is a global commodity exchange where Arabica coffee futures contracts are traded. It is similar to other hard and soft commodities such as crude oil, gold, wheat etc. Traders buy and sell futures, which are contracts to buy or sell coffee at a future date. A coffee futures contract is for 37,500 lbs of coffee, which curiously, is less than a full container load – but this is the standard contract size in the market. The “C Price” is the current or latest price or value of the C Market at a given time, which is expressed in US cents per pound (lb).
What influences the C Price?
Traditionally the main driver of the C price is supply and demand. Put simply, if there is an oversupply, you would expect the C price to fall. In theory with coffee, when there is an abundance of coffee the price softens and when there is a shortage, the price increases.
However, supply and demand are not the only drivers and unfortunately for us coffee roasters, there are plenty of traders out there who trade significant volumes of coffee contracts, manipulating the market with no intention to ever take physical delivery of coffee. There is money to be made (or lost) in buying and selling futures contracts, just like trading currencies.
In recent years, this speculative trading has become more and more influential, with some large hedge funds now including coffee positions in their portfolio.
The other major influence on the C Price, broadly related to future supply and demand, is the market sentiment on how things like weather and geopolitics might impact coffee supply. If there is even a threat of a frost, the C Price tends to rally strongly, regardless of whether or not a frost actually eventuates. Likewise, things like the price of fertiliser, general elections, global currency movements, EUDR laws, wars and conflicts can all send the C moving up or down depending on the sentiment or possible consequences. Sometimes, movements in other commodity prices can pull coffee up and down with them too, regardless of whether they are produced in coffee-growing regions.
So what is a “fair C price”?
When we speak to traders and growers at origin, most people agree that a reasonable C price that should be sustainable for both sides would be somewhere between 190 – 220 c/lb. But it’s impossible to determine a cost of production that applies to everybody, and as with any industry, the producers who are more efficient and/or produce higher quality coffees are rewarded with higher prices.
Historically, the C Price has averaged around 130 USc/lb over the medium and long-term. Usually fluctuating with supply and demand, with occasional spikes and drops which can mostly be attributed to good or bad weather. Today, the C Price is sitting above 320 c/lb, which ironically some would now say is unsustainable for roasters. What makes the C price challenging is not the level but the volatility and the sudden movements, either upwards or downwards. It can make it very hard for both sellers and buyers to forecast and budget.
Luckily in specialty coffee, the C price is not the price paid but it is only the baseline, and there are quality premiums that come into the equation too.
What’s going on with the C-Price at the moment?
At the end of 2024, the global C-price was 326c per pound. Since then, it has surged past 400c per pound – a significant jump (and record high) – and at the time of writing, sits at 373c. This puts pressure on every stage of the supply chain, from farmers at origin to the final cup.
Why is coffee getting more expensive? A mix of challenges is driving up coffee prices at origin:
- Supply chain struggles: Climate issues, shipping delays, and global tensions are making coffee harder to move.
- Extreme weather: Frosts in Brazil, erratic rain in Colombia, and droughts in key regions mean lower yields.
- Rising production costs: Fertiliser, labour, and transport are all getting more expensive.
- Market speculation: Investors betting on shortages are pushing prices even higher.
- Tough harvests back-to-back: Poor seasons in Brazil (2021), Colombia (2021), and Vietnam (2024) have all added to the squeeze.
The result is tighter supply and higher costs across the board. And like all businesses, we’re experiencing the same increased cost pressures locally through utilities, freight and cost of goods.
What we’re doing at Underground
We’re committed to paying fair prices to producers, ensuring their livelihoods remain secure while maintaining the high-quality coffee offering coffee drinkers expect. However, the current price increases are making it difficult to absorb costs without affecting the sustainability of our business, our café partners and the industry as a whole.
We know there’s never a good time for price increases; running a café is already a tough enough, and the last thing café operators need is more pressure. So we’re doing everything we can to help cafés navigate these challenges with transparency, support, and practical solutions. We’re not just responding to change – we’re having the tricky conversations around what it takes to build a sustainable, resilient coffee industry.
Here’s what we’re doing to back our partners:
- Helping have the tough conversations: We get that pricing shifts are hard to communicate. That’s why we’re sharing insights, tools, and data to help cafés explain changes to customers with confidence.
- Setting the pace on pricing: We’re adjusting our own café pricing first, setting a clear benchmark to follow. By leading the way, we’re helping to normalise necessary price increases while keeping customer trust intact.
- Keeping the conversation open: We’re here to talk. Whether through regular updates or direct conversations, we’ll make sure coffee drinkers are across industry changes and what it means for their favourite café.
- Backing cafés with quality and support: Now more than ever, quality is vital for a café's success. We‘re investing in our café partners with classroom, onsite and digital barista training, technical services and business support.
We understand that price increases aren’t easy, but maintaining quality and delivering on our flavour promise is non-negotiable.
Final thoughts
The sustainability of the coffee industry, from farm to café, requires a new approach to pricing.
Rising costs affect almost everything – rent, utilities, petrol, and food prices. Every year, we adjust, making choices based on our values and where we want to spend our money. For a long time, coffee has sat outside this upward trend. As such, causes a huge stir when prices can no longer be absorbed by producers, roasters and cafés.
If we want to keep up our favourite morning ritual, we need to put coffee in the same basket as everything else; something worth spending money on.