Understanding the Coffee “C Market” and It’s Impact on Green Coffee Prices
*Disclaimer: I’m not an economist nor would I call myself close to being an expert on the way coffee is traded globally. In this blog post I did my best to explain the “C market” and why it’s impact plays a direct (and indirect) role on the way coffee is priced each year.
For coffee enthusiasts and industry professionals alike, the U.S. Coffee C Futures market, also known as the “C market” plays a crucial role in determining the cost of green coffee worldwide. Whether you’re a roaster sourcing beans or a consumer enjoying a daily cup, the fluctuations in Coffee C Futures directly affect the prices you see. But how does this market work, and where does the money from rising prices actually go?
What Is the U.S. Coffee C Futures Market?
The C Market is a global commodity exchange similar to the stock market, where both the physical trading of green coffee and the trading of coffee futures contracts take place. Not all coffees are traded at C Market. In order for coffee to be traded, it must meet certain standards.
The Coffee C Futures contract, traded on the Intercontinental Exchange (ICE), is the global benchmark for Arabica coffee prices. It represents the expected price of coffee for future delivery, allowing buyers and sellers to hedge against market fluctuations.
Each Coffee C contract represents 37,500 pounds (about 250 bags) of green coffee and is used primarily by importers, traders, and large-scale buyers. This market functions similarly to futures trading in other commodities like oil, wheat, or sugar—prices fluctuate based on anticipated supply, demand, and external factors like weather, logistics, and global economic conditions.
How Coffee C Futures Affect Green Coffee Prices Globally
Since Arabica coffee is a globally traded commodity, the price set on the U.S. Coffee C Futures market influences how much coffee-producing countries can sell their beans for. When Coffee C Futures prices rise, the base price of green coffee increases worldwide, even for small, specialty coffee farms.
However, this pricing mechanism does not account for the quality of coffee. Specialty-grade coffee often commands a premium above the Coffee C price, negotiated directly between buyers (importers or sometimes the roaster) and farmers. Still, the base price for coffee remains tied to futures market fluctuations, making it critical for roasters and traders to monitor.
For example, when Coffee C Futures surged above $2.20 per pound in 2022, green coffee costs spiked globally. Even if a farm in Ethiopia or Colombia was producing high-end, micro-lot coffee, their pricing still reflected an increase due to the rising Coffee C Futures price. Conversely, when the market dips, farmers often receive lower payouts, even if their production costs remain high.
Vietnam green coffee beans being loaded into a semi container. Source: Viego Global Team
Commodity Coffee vs. Specialty Coffee: Key Differences
Quality & Grading Standards
Commodity Coffee:
Traded as a standardized product, primarily based on volume and price rather than quality.
Graded using the C Market system, focusing on physical characteristics rather than cup quality.
Generally below 80 points on the 100-point Specialty Coffee Association (SCA) scale.
Higher tolerance for defects and less focus on unique flavor profiles.
Specialty Coffee:
Defined by exceptional quality, traceability, and unique flavor profiles.
Evaluated by Q-graders using the SCA cupping scale.
80 points or higher on the SCA scale.
Minimal defects and strong emphasis on quality sorting.
sorting raw coffee for size and defects
Pricing & Market Dynamics
Commodity Coffee:
Price tied to the Coffee C Futures Market, with significant volatility.
Typically produced in large volumes, prioritizing yield over quality.
Most mass-market coffee brands (think Folgers and Maxwell House) rely on commodity coffee for affordability.
Specialty Coffee:
Priced above market rates, based on quality, direct relationships, and exclusivity.
Sold through direct trade, micro-lots, or auctions, ensuring higher premiums for farmers.
Offers greater price stability for both farmers and buyers.
Sourcing & Farming Practices
Commodity Coffee:
Often blended from multiple farms or regions, leading to uniform but less distinct flavors.
Produced on large plantations, focusing on high-yield efficiency.
Many commodity coffee farms operate under low wages and unsustainable practices.
Specialty Coffee:
Single-origin or micro-lot, emphasizing traceability and terroir.
Sourced from smaller farms and cooperatives, where meticulous attention is given to quality.
Encourages ethical trade, fair wages, and sustainability initiatives.
hand picking coffee in Colombia
Why Rising Coffee C Futures Prices Don’t Mean More Money for Farmers
One common misconception is that when Coffee C Futures prices go up, coffee farmers automatically earn more money. Unfortunately, that’s usually never the case.
The reality is that most of the money from rising coffee futures prices doesn’t go to the farmers but instead flows through multiple layers of the supply chain, including:
Speculators and Traders: Many Coffee C contracts are traded by hedge funds and financial institutions that profit from price fluctuations without handling actual coffee.
Exporters and Middlemen: Many farmers don’t sell their coffee directly but work with cooperatives or intermediaries who take a significant cut.
Freight and Operational Costs: Rising market prices increase transportation, storage, and processing costs, further reducing farmers’ earnings.
Even with higher futures prices, many smallholder farmers continue to struggle financially, as they often lack direct market access to secure fair prices.
The Future of Coffee Pricing & Ethical Sourcing
As climate change, geopolitical events, and economic instability continue to impact global coffee production, volatility in the Coffee C Futures market is expected to persist.
To some degree, choosing coffees that are ethically sourced, from renowned importers, that have complete traceability, is the next step forward. Purchasing coffee this way, to some degree, can help bypass traditional futures-based pricing, ensuring that more money goes directly to the farmers who grow the coffee we all enjoy.
I try and prioritize relationships with producers and ethical sourcing to ensure I pay prices that reflect the coffee I’m using from producers around the world. While the Coffee C Futures market sets the baseline for coffee pricing, going beyond that to create a more sustainable industry, despite the increase in costs.