World coffee market: prices rise, with robusta now close to arabica

Coffee experts state that Arabica and Robusta coffee are so different that they shouldn't even be compared to each other.
The main differences between these types of coffee are disease resistance, cultivation altitude, and chemical composition.
As the name suggests, Robusta is more "robust" than Arabica and is less vulnerable to pests or diseases due to its higher caffeine content.
The altitude at which Arabica is grown is usually higher than that of Robusta, making it more challenging to cultivate^[1].
From a chemical perspective, Arabica contains half the caffeine and twice the chromosomes compared to Robusta. This aspect makes Arabica coffee more complex in terms of aroma and generally preferable in taste compared to Robusta coffee, which is more bitter due to its higher caffeine content.
It is not surprising, therefore, that Arabica coffee is more appreciated by consumers, who consider it superior in quality compared to Robusta, and that Arabica coffee has higher production costs.

In recent months, however, there has been a rapid convergence of Robusta coffee's financial prices with those of Arabica.
In this article, we will explore the main determinants that have driven the growth of Robusta coffee, bringing it closer to the levels of Arabica.

Financial Price Analysis

The financial prices of Arabica and Robusta coffee are both listed on the Intercontinental Exchange (ICE).
The following chart shows the prices of the Robusta coffee and the coffe C, wich is the world benchmark price for Arabica coffee.

Financial Prices of Robusta and Coffee C in Dollars per Ton

The chart highlights how the financial prices of Robusta coffee have nearly reached the levels of Arabica coffee prices in recent days.
Specifically, at the end of August, the financial prices of the two coffees closed with a gap of only $400 per ton, with Arabica coffee priced above $5,500/ton and Robusta coffee above $5,100/ton.
These figures are particularly surprising when compared to the past annual averages of the two coffee prices, where in some years, Arabica coffee cost more than twice as much as Robusta.
The following table compares the various annual averages of the financial prices of the two coffees from 2019 to the present.

Annual Averages in Dollars per Ton of Financial Prices of Arabica and Robusta Coffee

The table clearly shows how, in the first 8 months of 2024, the financial prices of the two coffees have converged compared to the previous years' annual averages. Specifically, in the 2021-2022 biennium, the annual average prices of Arabica coffee were more than double those of Robusta.
The convergence of the financial prices of the two coffees, which began during 2023 and intensified in 2024, is due to several determinants discussed later.

Determinants of the Higher Growth in Robusta Coffee Prices

As is often the case in economics, changes in price levels do not depend on a single determinant but on multiple factors occurring simultaneously.
The main determinants that have contributed to the convergence of the two prices are:

• Adverse weather conditions, which have damaged the Robusta coffee crop, especially in Vietnam, Ivory Coast, and Uganda.
• The Red Sea crisis, which has more significantly impacted Robusta shipments connecting East Asia (such as Vietnam and Indonesia) to Europe.
• The increase in demand for Robusta, which is itself due to the growing demand for coffee blends, which are becoming more preferred over so-called "single-origin" coffees.
• The improving quality of Robusta coffee.

Among these determinants, the last one requires more specific knowledge of the coffee market to be understood. It is also particularly interesting to explore because it will continue to influence Robusta coffee prices in the coming years, unlike, for example, the first two, which should lead to shorter-term price changes.

Improvement in Robusta Coffee Quality

Until recently, Robusta beans were marketed with numerous defects, as product quality was not as prioritized as in the case of Arabica. The demand for premium Robusta was very low, which did not encourage farmers to improve the quality of the product.
Another aspect that has long disadvantaged the quality of Robusta compared to Arabica is the disparity of knowledge between the two products. Arabica has historically been much more important than Robusta, and in addition to being discovered and traded much earlier, it has also received more investment in terms of research and development.
In contrast, Robusta has been neglected for a long time, and until today, there have been few investments aimed at improving its processing quality.

However, recently, with the increase in demand for Robusta for new coffee blends, new roasting approaches for Robusta are being explored, and higher standards are being introduced to improve product quality.
There is still significant room for improvement in producing quality Robusta, but the growing demand has already led to greater attention to various stages of product processing. In addition to correcting the large number of defects in the beans, it is increasingly important to start with a good harvest and drying of the coffee.

Conclusions

The recent rapprochement of robusta coffee financial prices to those of arabica coffee cannot be attributed solely to temporary factors such as the Red Sea crisis or unfavorable weather conditions that ruined the Asian robusta crop.
The rise in robusta coffee prices also stems from an increase in demand for blends and the quality of coffee produced. For a long time, the quality of robusta coffee was neglected and farmers were never incentivized to make investments to improve the quality of the product. With the increase in demand for blends this situation is beginning to change and robusta coffee is gaining in quality.
This does not mean that the price of robusta coffee will continue to approach that of arabica coffee; on the contrary, it is likely to remain at lower average levels given, its greater ease of production. What we do find useful to point out, however, is that the increased interest in higher quality robusta coffee will continue to support, at least in part, the prices of this type of coffee.