Arabica Prices Explained

Arabica prices increased sharply by 30% as dry weather conditions in Vietnam and low-level rains in Brazil affected the global supply. The intense heatwave in Asia reduced Vietnam’s coffee growers’ yield. Brazil’s Minas Gerais region (which contributes 30% of Brazil’s arabica crop) received 1.3 mm of rain or only 24% of the historical average. These compounding factors sent bullish prices to smaller coffee exports.

However, Indonesia’s coffee production forecast optimistic sentiments as the country expected to bounce back from a down year to 10.9 million 60-kilogram bags, thanks to favorable weather conditions. Thus, the output will stabilize the soaring arabica prices.

Why are Arabica prices fluctuating?

1. Weather Conditions

Brazil leads the world’s top Arabica producers, but the recent devastating hot weather in the country impacts its coffee production as water scarcity troubled bean growers. Thus, this creates a market gap between suppliers and consumers, ultimately affecting Arabica prices.

2. Coffee Quality

Arabica plants growing temperature ranges from 15 to 24 degrees Celsius. If the temperature drops or rises from this required bracket, it will affect the plants’ crop yields and coffee quality. Thus, low-quality Arabica bean means cheaper prices and premium quality goes for higher prices.

3. Production Cost

Arabica bean’s quality relies heavily on rose and citrus fertilizers, soil management, and adept harvesting.

These all require resources and effort to maintain and achieve. Therefore, coffee growers demand good value exchange to compensate for their work and livelihood. Generally, the rising production cost is also a price driver of Arabica coffee.

4. Currency Fluctuations

Like any other commodity, Arabica’s price in the international market is in U.S. dollars. Therefore, a strong dollar rate means an increase in Arabica prices. Similarly, a weak dollar rate will result in a decrease in Arabica prices.

Which variables impact the price of Arabica?

• Weather Conditions
• Coffee Quality
• Production Cost
• Currency Fluctuations
• Cultivation Practices
• Global Economic Conditions

Where does Arabica come from?

Arabica coffee famously originated in the Southwestern highland regions of Kafka and Buno of Ethiopia.

Its cultivation spread to Sudan, Yemen, and Arabia, Ethiopia’s neighboring countries. Arabica coffee found its way to Europe in the 16th century through trade and it quickly expanded to America and other countries in the world.

Generally, the Arabica season falls on the country’s rainy season where it grows however, its season also depends on the geographic location and climate.

In Brazil, the largest Arabica producer, the Arabica season starts from May to September. This is the dry season when cherries ripen and are ready to be harvested.

In Ethiopia, the Arabica season runs from October to February. Just like Vietnam, Ethiopians harvest their ripe cherries through hand-picking which is time-consuming but produces high-quality Arabica coffee beans.

The best processing method for Arabica coffee beans depends on the desired flavor profile.

However, wet processing is generally considered to produce the highest quality as it provides a clean, citrusy, and flowery coffee flavor.

Arabica’s sweet and nutty flavor makes it a perfect ingredient for coffee recipes such as Lattes, Cappuccinos, Mochas, Macchiatos, and Iced Coffee.

Primarily, this caffeine delight comes from Brazil which has an average yearly production of 30 million Arabica coffee bags. Ethiopia, Guatemala, Honduras, India, and Vietnam follow distantly.

What is the future price of Arabica?

Warmer temperatures, below-average rainfall, and supply chain traffic constantly trouble bean growers and consumers, leading to fluctuating arabica prices in short-term and long-term patterns. 

For instance, the effects of El Niño aren’t over in Asia, and the dry weather in Brazil reduced the country’s crop yields. Thus, global demand offsets its inventory in the coming years. Additionally, supply issues triggered by geopolitical tensions in the Red Sea will highly affect its prices in the market. Moreover, the growing disposable incomes, unique flavors, and the strengthening coffee culture among consumers worldwide contribute to the market’s expansion.

Overall, Arabica coffee is the most popular in the world, accounting for about 60% of global coffee production due to its smooth, mild flavor, and complex aroma. Market analysts predicted a bullish Arabica price in 2030 at $4.50 per pound.