After seeing prices jump to record highs, driven by climate pressures and lower yields, the coffee industry had at the start of the year seen commodity costs ease – but clouds are gathering again amid fears of what how a ‘super’ El Niño may affect the sector.
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Frequently asked questions
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How could a ‘super’ El Niño affect global coffee prices in 2026–2028?
A strong El Niño doesn’t automatically mean coffee prices will rise in a straight line, but it does tend to increase uncertainty, and uncertainty is expensive in commodity markets. The most immediate effect is usually higher volatility as traders and buyers price in a bigger weather risk premium, even before any measurable drop in production shows up in export statistics. That can mean sharper day-to-day movements in futures and more nervous physical markets, particularly for arabica. El Niño can also amplify other operational risks, not just agronomy. If weather-driven disruption affects logistics and shipping routes, it can tighten supply availability in consuming markets even when coffee exists on paper, adding further pressure to differentials and spot prices.
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What role do speculation and price differentials play in coffee cost inflation?
Speculation can magnify price movements in both directions by accelerating how quickly the market responds to developing stories, such as warnings about El Niño. Even if the physical impact on crops won’t be visible for months, speculative activity can move futures sharply in days, creating the kind of spikes and corrections that make procurement and pricing decisions harder for roasters and retailers. This is why the industry can see dramatic single-day moves during periods of heightened uncertainty. Price differentials are a separate, often misunderstood driver of cost inflation. The commodity benchmark is only the starting point; buyers then pay origin and quality-related premiums on top, and those premiums can climb steeply when specific coffees are tight, when logistics are constrained, or when demand concentrates on certain origins. When differentials from major export markets such as Brazil and Colombia are high at the same time as the benchmark rises, roasters can face a double hit: a higher market price plus a higher premium for the coffees they rely on.
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When will consumers actually feel higher coffee prices in retail and in cafés?
In most cases, not immediately, because there is friction in the system. Roasters and retailers often have coverage through hedging, forward contracts and stock, which can delay the pass-through of higher green coffee costs. Pricing also depends on commercial structures. In Europe, large retail buying alliances can slow and reshape price increases because retailers have significant negotiating power, and suppliers may face longer lead times before new costs are reflected on shelf. Where increases do come through, they may not look like a simple ticket-price jump. Businesses may attempt to manage price architecture through selective increases, changes to pack formats, fewer promotions, or adjustments to blends. These are ways to protect volume and margin without shocking consumers with an abrupt headline rise.
