Specialty Coffee Prices Are Changing - Here's Why

Pretty soon you’re most likely going to notice your weekly whole bean getting more expensive, maybe some of you already have. Before you blame it on inflation or tariffs (both of which still can affect coffee prices), we need to talk about the biggest reason for rising coffee prices – the ‘C-Market’. The C-Market works a lot like a stock market, and just like the stock market, it can be confusing. 

What Is The C-Market?

The C-market (or coffee "C" futures) is the global market where the price of raw, unroasted Arabica coffee is traded. It works like a stock market for coffee, setting prices based on supply and demand. Traders, coffee companies, and farmers use it to buy and sell coffee contracts, which lock in prices for future delivery. There’s also another market (Robusta Coffee Futures) that is used for the pricing of Robusta coffee. 

Why Is The C-Market Important?

While buying and selling coffee on the C-Market is complex, its main function is to create a standard price for Arabica coffee worldwide. This helps buyers (roasters and importers) and sellers (farmers and exporters) agree on prices, manage risks, and plan for the future. Prior to the C-Market you would typically need to wait until a coffee was harvested before purchasing it, which can take several months. During this time, a purchaser and a producers' needs can change. The solution to this problem is something called ‘futures contracts’ – which is the main way coffee is purchased on the C-Market. You can also purchase coffee using ‘spot contracts’ which go off the coffee's spot price – how much it costs to buy it ‘on the spot’ – and typically get it delivered right away. 

With a futures contract, a buyer and seller agree on a price and terms in the present day but the actual purchase would take place on a later date – in the future. This made selling and buying coffee much less of a risk, but as it turns out, didn’t solve every problem. What became a common occurrence was that roasters and exporters would back out of the deal usually due to financial circumstances or a farmer not having as much coffee as they planned. This meant that a lot of farmers and producers were left in really tough spots.

That problem was also solved, this time with what is called the ‘futures exchange’.

The futures exchange is the modern C-Market. It looks very similar to futures contracts with one big difference – instead of selling and buying directly, a farmer or producer will sell to the exchange at the current rate before their harvest is ready. Meanwhile, an importer can then purchase that coffee from the exchange and after a few months when the coffee is harvested and shipped, the importer will sell that coffee to a roaster at the new current market rate. 

What Is Going On With The C-Market Right Now?

At the time of writing this, the C-Market is at an all time high. The earliest data of the C-Market goes all the way back to 1980, and in all that time it never reached the amount that it is sitting at right now. Keep in mind that what coffee costs on the C-Market is not the final price that importers and roasters pay. You still have to factor in things like shipping, warehousing costs, and a quality-based differential for specialty coffee (more on that below). 

The answer to why it’s so high right now isn’t very clear. A lot of variables can ultimately affect the C-Market; weather conditions, supply and demand, speculation of trends, and currency changes. 

How Does The C-Market Affect Specialty Coffee?

Price isn’t the only thing that the C-Market helps standardize. The C-Market also has minimum quality standards for coffee traded on it. The standards include things like: coffee grade, moisture content, processing method, and flavor – though the C-Market primarily focuses on physical characteristics over cup quality. The coffee that is generally being traded on the C-Market is commodity coffee, which is just coffee that meets the minimum trading standards. 

What makes specialty coffee so special is that it’s defined by a whole different set of standards. The Specialty Coffee Association (SCA) has an official value assessment using an 100-point cupping scale that is certified through Coffee Quality Institute (CQI) ‘Q-graders’. Specialty coffees have to score 80 points or higher on the SCA’s cupping scale. Aside from this grading, specialty coffee is also defined by its traceability and unique flavor profiles. All that to say, specialty coffee far exceeds the C-Market’s standards, and thus it’s sold at a premium compared to commodity coffee. Specialty coffee is what we buy and is on our shelves or behind the coffee bar.

Specialty coffee is sometimes bought and sold directly between farmer and roaster, bypassing the C-Market entirely. However, more frequently, contracts between importers and roasters reference  the C-Market as a benchmark when determining their selling price, which tends to be significantly higher than the C-Market due to the prices that higher quality coffee demands.

The Bottom Line

The most likely trend is that coffee prices will continue to rise for roasters, importers, and coffee consumers. The current state of the C-Market is putting a lot of stress on specialty coffee roasters, especially those that are smaller and more local. We at Sunergos have had to navigate this uncertainty, and truthfully it hasn’t been easy. We remain committed to continue sourcing the most delicious coffee we can find at the fairest price possible, while at the same time being sensitive to how higher prices affect all of us that have a shared love for good coffee.