2011 vs 2024 C Market Price

The C Market Hits a Record High: Lessons from 2011 and What It Means for 2024

In 2011, the C market for coffee hit a record high of over $3 per pound, sending ripples throughout the global coffee supply chain. Driven by a perfect storm of factors, this surge impacted farmers, roasters, and consumers alike. Fast forward to 2024, and we’re seeing another significant spike in coffee prices, with a high of $3.35. To understand today’s market, it’s worth reflecting on what happened over a decade ago. Let’s use lessons from the past to help us understand the future.

What Drove the 2011 C Market Spike?

The 2011 spike wasn’t just about a coffee shortage—it was the result of interconnected forces that amplified market volatility. After reviewing past articles and reflecting on experiences in the industry, these were the major factors driving the C market rise…

• Weather Events in Brazil: Severe droughts and frosts devastated coffee crops in Brazil, the world’s largest producer, creating a global supply shortfall that sent prices soaring.

• Rising Global Demand: Emerging markets like China and India were embracing coffee as a lifestyle beverage, while demand in Europe and North America remained strong. This growing consumption, paired with reduced supply, set the stage for a price surge.

• Speculative Trading: Speculators bet heavily on rising prices, driving the market even higher and exacerbating volatility.

• Weak US Dollar: Coffee, traded globally in US dollars, became more affordable for buyers using stronger currencies, increasing demand and further straining supply.

• Supply Chain Bottlenecks: Shipping delays and logistical challenges heightened the perception of scarcity, fuelling panic buying.

• Stockpiling: Importers and roasters stockpiled coffee to hedge against rising prices, further reducing available supply and driving prices higher.

  Hmmm…interesting how some things stay the same (rising global demand, weather events, speculative trading) while others have shifted (a weaker US dollar and rising inflation).

The Aftermath: Lessons from 2011

The 2011 spike left a lasting imprint on the coffee industry:

• Farmer Optimism and Overproduction: Many farmers expanded production to capitalise on high prices. However, when the price crashed in 2012 to a low of $1.45 it highlighted the quick turn around on the pricing and oversupply left them vulnerable.

• Price Volatility Highlighted: The dramatic rise and fall underscored the inherent risks of commodity markets and the disconnect speculative trading can create.

• Specialty Coffee’s Resilience: The specialty sector leaned into direct trade and long-term contracts, reducing reliance on the volatile C market and creating more stable relationships.

• Drop in Quality: Producers who relied on C market pricing often rushed production to take advantage of the high prices. This resulted in under-ripened or poorly dried coffee, leading to a drop in quality.

2024: What’s Different This Time?

While today’s spike shares similarities with 2011, the coffee landscape has evolved.

• Climate Challenges Persist: Adverse weather in Brazil is still a driving force, but better agronomic practices and forecasting tools provide more ways to adapt.

• Speculative Trading Remains a Factor: Speculation continues to influence volatility, with algorithmic trading adding new layers of unpredictability.

• Direct Trade Relationships: Many roasters now bypass the C market altogether, ensuring “fair/higher” compensation for farmers and greater stability through direct trade.

• Sustainability and Quality Focus: Consumers and roasters alike are willing to pay premiums for sourced, high-quality coffee, offering a buffer against market fluctuations.

• Technological Advances: Innovations in agriculture and data analytics help producers and buyers navigate market changes more effectively.

What the 2024 Spike Means for the Coffee Industry

The parallels between 2011 and 2024 highlight both progress and persistent challenges in the coffee world. While high prices can offer short-term relief for farmers, they also come with increased costs and risks. For roasters, managing margins becomes a tightrope act, and consumers must weigh whether to absorb higher prices.

The current moment underscores the ongoing need for sustainable practices, fair farmer compensation, and supply chain transparency. By reflecting on the lessons of 2011 and leveraging today’s tools—whether direct trade relationships, technology, or consumer education—the coffee industry can navigate this volatility with greater resilience and collaboration.

The C market may be unpredictable, but valuing coffee both as a product and a livelihood remains a constant.

Reading: Backwardation: Understanding the Inversion of the Coffee C Market explains the rare phenomenon where spot prices (the cost of coffee for immediate delivery) exceed futures prices (agreements for delivery at a later date). This inversion, driven by low stocks of ICE-certified Arabica, highlights immediate supply pressures and its ripple effects on producers, traders, and roasters.

Watching: On a recent talk show, Jerry Seinfeld shared his thoughts on the importance of coffee, describing it as “the only thing in your life that’s 100% on your side every day.” A lighthearted take from the comedy legend, it’s a fun clip.

Listening: Morgan Housel, bestselling author of The Psychology of Money, joins Andrew Huberman on the Huberman Lab podcast to discuss how saving, spending, and wealth signaling shape our psychology. They delve into common financial mistakes, social media’s impact on spending, and strategies for building wealth with purpose and security.

Brewing: This week our team is deep into brewing Winterspice. What’s Winterspice? It’s a top selling seasonal coffee at Rosso where the team goes deep into architecting a blend that presents itself with flavours of the season, with chocolate orange, mulling spices and a sticky toffee pudding sort of tactile sensation. Best brewed with friends and family.

Rosso team sent me this photo of their quality control while Winterspice was designed.

respond with a photo of your brew bar or get creative with an AI generated scene and we’ll feature and share in an upcoming week of BTD

Distance: Buy the Drip run club. Clocking some kilometers. Two people ran marathons this week, big ups to them. Help us push a few more kilometers through this week?

“Feel the rhythm! Feel the rhyme! Get on up, it’s bobsled time!”

Want to join us as we hit the road? Let’s connect on Strava! or, join our Whoop group – just respond to the email and let’s grind together!