Factors Affecting Coffee Prices: What Influences the Price of Coffee?

Factors affecting coffee prices have always been a key topic for both industry professionals and consumers. Coffee prices are constantly shaped by a variety of elements — from climate conditions and production changes to trade policies and global consumption trends. This article provides an in-depth look at the main factors affecting coffee prices and their impact in 2025.

Historical Trends in Coffee Prices

Historical data shows that factors affecting coffee prices have consistently been linked to economic, climatic, and politial conditions. Examining fluctuations over the past decades reveals important patterns:

• 1970s–1990s: The global coffee market experienced high volatility. One major reason was the collapse of the International Coffee Agreement (ICA) in 1989, which ended export quotas and drove prices upward.
• 2000s: Oversupply in the early years pushed prices down, but by the mid-2000s, rising demand in emerging markets like China and India caused prices to climb again.
• 2010s: Coffee prices peaked in 2011 due to unfavorable weather in Brazil and growing demand. Later, increased production drove prices down.
• 2018s–2023s: High supply from major producers like Brazil and Vietnam reduced prices in 2018–2019. However, supply chain crises and recurring droughts in 2021 and 2022 caused prices to rise sharply.

Key Factors Affecting Coffee Prices

Supply-Related Factors

• Production in major countries

Brazil, Vietnam, Colombia, and Ethiopia are among the largest coffee producers globally. Any fluctuation in their production directly impacts prices. For example, in 2019, Brazil’s coffee production fell by 20% due to drought, which in turn increased global prices by the same margin.

• Pests and diseases

Outbreaks of coffee leaf rust or pests such as the coffee berry borer can significantly raise coffee prices. The Central American coffee leaf rust crisis of 2014 is a notable example.

• Climate change

Rising temperatures, shifting rainfall patterns, and extreme weather events have a direct effect on coffee production. Studies suggest that by 2050, around 50% of coffee-growing land may become unsuitable, potentially leading to substantial price increases.

Demand-Related Factors

• Global consumption and emerging markets

Rising coffee consumption in countries like China and India has fueled price growth. Between 1995 and 2015, global coffee production increased by 65%, reflecting higher demand.

• Global economic conditions

Economic downturns reduce coffee demand. For instance, a 1% drop in global GDP growth typically leads to a 0.95% decrease in coffee demand. During recessions, consumers often switch from Premium Specialty Coffee in Iran and other high-priced varieties to more affordable options.

Market and Policy Factors

• Currency fluctuations

Since coffee is traded in US dollars, a depreciation in the currencies of producing countries (such as the Brazilian real) encourages exports and lowers global prices.

• Trade policies and political instability

Sanctions, tariffs, and political unrest in producing countries can disrupt supply and push prices higher. For example, political instability in Nicaragua in 2018 reduced production and increased prices.

• Speculation in futures markets

Coffee futures trading on ICE and COMEX can cause short-term price swings. Investors buying and selling futures contracts may push prices up or down in the short term.

Factors Affecting Coffee Prices in Iran

In recent years, coffee consumption in Iran has grown rapidly. Cultural trends such as café culture, lifestyle changes, and the popularity of home brewing have increased demand from 8,000 tons in 2018 to 49,000 tons in 2023. This surge, combined with Iran’s reliance on imports, means that domestic coffee prices are heavily influenced by currency fluctuations, inflation, and economic policies. The removal of subsidized exchange rates and the shift to free-market dollar rates have significantly increased import costs.

On the global side, challenges such as climate change in producing countries (like Brazil and Vietnam), rising production costs, and higher international shipping expenses have also affected Iranian coffee prices. Extreme weather events such as droughts and floods reduce global supply, driving prices upward.

Additionally, sanctions and restricted access to foreign currency have intensified exchange rate volatility, forcing importers to adjust prices frequently. However, a decrease in the US dollar rate does not always lead to lower coffee prices, as importers may hesitate to adjust prices downward due to currency instability and risk of future increases.

The Impact of COVID-19 on Coffee Prices

In 2020, café and restaurant closures reduced global coffee demand by 30%, causing prices to fall. However, by the end of that year, increased home consumption and market reopening drove prices back up. In 2021 and 2022, supply chain disruptions and rising production costs pushed coffee prices to their highest levels in recent years.

Coffee Price Forecast (2023–2024)

Short-term price volatility is expected to continue. Major factors affecting coffee prices include geopolitical tensions, climate change, and supply chain disruptions.

Long-term trends highlight three important drivers:

• Climate change: The need for climate-resilient coffee varieties and shifting plantations to higher altitudes will increase production costs.
• Rising demand for sustainable coffee: Organic and Fairtrade brands will see greater demand, pushing their prices above conventional coffee.
• Technological innovation: Precision agriculture and smart pest control can boost productivity and reduce price volatility.

Buying Fresh Coffee at Great Prices from Diamante

Given the many factors affecting coffee prices, it’s clear that both climate and economic forces, along with trade policies, play a significant role. To stay competitive, producers must adopt strategies such as diversifying their offerings and using climate-resilient cultivation methods.

At Diamante Coffee, our goal is to provide you with high-quality coffee at fair prices, whether you’re buying in bulk or for personal use. From famous coffee brands in Iran to premium coffee brands in Iran and high quality coffee brands for cafés, we ensure freshness and exceptional taste in every cup.