Coffee bean prices tumble, but will Malaysians pay less for their daily cup?

KUALA LUMPUR: Global Arabica coffee prices have fallen sharply this year, reversing part of the surge that squeezed Malaysian coffee shops and chains — but don't expect your morning latte to become cheaper just yet.

Arabica was trading at US$2.81 (about RM11.45) per pound at press time on Sept 20, Trading Economics data showed. This means green bean prices have fallen 21.49 per cent so far this year.

CIMB Securities Sdn Bhd, in its Sept 13 consumer sector note, said coffee prices had already fallen 18.6 per cent year-to-date (YTD) and 29.2 per cent year-on-year (YoY) to US$2.91 per pound as at Sept 10.

Coffee was one of only two commodities tracked by the research house to record a YTD decline, alongside cocoa, which fell 2.1 per cent.

The other seven commodities rose, led by crude oil at 78.8 per cent and Brent crude at 77.2 per cent. Wheat climbed 42.8 per cent, tin 37.3 per cent, polyethylene 36.6 per cent, sugar 28.4 per cent and crude palm oil 16.4 per cent.

The decline in coffee prices follows a sharp run-up in 2024 and record highs in 2025, when adverse weather disrupted supplies in major producing countries.

Arabica fell as low as US$2.41 (RM9.84) per pound on June 9 before rebounding. At its current level, prices remain about 16.44 per cent above that low.

More recently, improving supplies from Brazil, the world's largest Arabica producer, have helped drive prices lower.

MBSB Research, in its August commodity note, said rapid harvest progress in Brazil filled warehouses, resulting in temporary logistics bottlenecks and a brief spot premium.

But the record harvest has since helped ease tight global inventories, putting downward pressure on bean prices.

Arabica is the global benchmark for coffee futures contracts traded on the Intercontinental Exchange.

It accounts for about 75 per cent of global coffee production and is cultivated mainly in Brazil, which makes up about 40 per cent of the world's total supply, and Colombia.

Robusta accounts for the remaining 25 per cent and is produced mainly in Vietnam, which makes up about 15 per cent of global coffee supply, and Indonesia.

MBSB Research said Robusta prices averaged US$1.67 (RM6.82) per pound in August, down 2.8 per cent month-on-month, as a surge in coffee exports from Vietnam weighed on the market and pushed prices to a multi-month low.

Robusta prices were also down 6.6 per cent YoY as higher shipments from major Asian producers eased pressure on global supply.

Tradeview Capital fund manager Neoh Jia Man said coffee and cocoa were outliers among major commodities, with both unwinding supply-driven rallies.

He said Arabica coffee prices had surged by almost 100 per cent between the beginning of 2024 and end-2025, while cocoa rose by about 40 per cent over the same period.

"The former was driven by unfavourable weather in key producing regions including Brazil and Vietnam, while the latter was hit by a combination of poor weather and crop disease.

"With supply now recovering, both commodities are seeing price moderation this year," he told Business Times.

Neoh said the correction in both commodities reflected a normalisation in supply as weather conditions improved.

For cocoa, he said there was an additional factor in the form of demand destruction, as chocolate manufacturers passed higher bean costs on to consumers.

Areca Capital Sdn Bhd chief executive officer Danny Wong said cocoa prices had fallen from their peak in December 2024, resulting in higher stockpiles and pointing to an oversupply in the market.

For coffee, he said Brazil was heading for a record crop, putting downward pressure on bean prices.

"Previous high prices in 2024 and 2025 also pulled back some demand and consumption.

"Lower prices are obviously a margin tailwind for operators, but this hinges on their respective price control mechanisms and policies," he said.

Wong said some operators lock in forward contracts for six or 12 months, meaning the benefit of lower bean prices may only be reflected in their costs after a lag.

WILL LATTE PRICES GO DOWN?

For consumers, however, cheaper beans do not necessarily mean cheaper coffee.

Neoh said he did not expect retail prices of packaged coffee products or coffee drinks at cafes to fall significantly, as lower bean costs could be offset by other expenses.

"We expect rising costs of other raw materials used in packaged coffee, such as vegetable oil and sugar, to offset the dip in bean prices," he said.

At cafes, he said coffee beans made up only a minor share of the total cost of serving a drink, with rental and labour accounting for a larger portion.

"We believe coffee chains have been absorbing higher bean costs over the past two years, as intensifying competition from new entrants has made it difficult to raise prices. Consumers are therefore unlikely to see much benefit from lower coffee bean prices," he said.

This means that even as global coffee prices retreat, Malaysians are unlikely to see the cost of their regular latte fall by a similar margin.

ZUS Coffee's experience illustrates how bean prices have filtered through to retail prices and how the relationship is not always straightforward.

In February 2025, the homegrown coffee chain raised prices of most of its beverages by 30 sen, its first price adjustment in five years, citing surging raw material costs after global coffee bean prices hit their highest level since 1977.

The company said at the time that it had been absorbing the higher costs throughout 2024.

However, it kept the prices of several drinks unchanged, including its CEO Latte, Espresso, Americano and Coconut Latte.

Today, ZUS Coffee, which has 920 stores nationwide, lists its hot and iced CEO Latte at RM9.90 on its official application, putting a regular cup below the RM10 mark.

Starbucks Malaysia, which has more than 320 stores, prices its Caffe Latte at around RM15 to RM15.90, depending on the ordering channel.

Meanwhile, Luckin Coffee, the Chinese chain that entered Malaysia in 2025, had 83 stores as at March 31, 2026. Its standard latte was priced at RM13 when it launched in Malaysia, although app-based promotions can bring the effective price lower.