RIYADH: The recent surge in global coffee prices, driven by supply disruptions, rising production costs, and continued growth in global demand, has not impacted Saudi coffee to the same extent.
Saudi coffee is classified as a limited-volume, high-value product, said Salman bin Ahmed Al-Malki, chairman of the Board of Directors of the Coffee Cooperative in Jazan, who spoke to Al-Eqtisadiah.
According to data from the Ministry of Environment, Water and Agriculture, production in the Jazan region, which accounts for most of Saudi Arabia’s coffee cultivation, has exceeded 1,000 tonnes annually. This production comes from 2,000 farms, encompassing more than 400,000 coffee trees.
Limited supply, stable prices
Al-Malki emphasized that Saudi coffee prices do not fluctuate at the same pace as global prices because it is a limited-volume, high-value product. Its price is determined by productivity, crop quality, processing methods, production costs, and demand for the local product. He noted that support and development programs have helped mitigate the impact of external fluctuations.
He added that domestic demand for coffee has not witnessed a significant decline despite rising prices. However, consumers have become more focused on comparing quality and price, with growing demand for Saudi coffee and other locally produced products.
He pointed out that the most prominent challenges facing small and medium-sized enterprises are coffee price volatility, high working capital and operating costs, and weak negotiating power with suppliers. He emphasized that addressing these challenges requires diversifying supply sources, establishing medium- and long-term contracts, improving inventory management, reducing waste, and expanding contract farming.
Climate impact
He said that the main reasons for high and volatile coffee prices are weather-related disruptions in Brazil, the world’s largest coffee producer. Droughts, high temperatures, and irregular rainfall have affected Arabica coffee production, along with concerns about the spread of plant diseases due to continued heavy rains.
He added that limited inventories on the New York and London exchanges, despite a relative improvement in supplies, have kept stocks at historically low levels, making prices highly sensitive to any change in weather conditions or export activity.
Costs reach consumers
Al-Malki pointed out that rising costs of fertilizers, energy, labor, processing, and shipping are another major factor driving up prices. He explained that these increases are not borne solely by the farmer, but also affect the importer, the roaster, the coffee shop, and ultimately the end consumer.
He added that continued growth in global consumption, especially in specialty coffee markets and emerging markets, means that any slight decline in production or exports is quickly reflected in global prices.
Local price range
He explained that Saudi coffee prices are determined by seasonal yield, bean quality, sorting percentage, processing and drying methods, grade, and the level of demand for Saudi crops, adding that they typically range between SR120 ($31) and SR300 per kg.
Al-Malki said that the record-breaking price increases of the past two years resulted from declining global stockpiles and climatic disturbances in several producing countries, most notably Brazil, as well as rising costs of agriculture, energy, and shipping.
Prices stabilize
The chairman added that coffee prices entered a period of relative stability after declining in the second quarter of 2026 compared to the record levels seen in 2025. This decline was supported by improved global production forecasts. He noted that World Bank estimates indicate Arabica prices rose by more than 40 percent in 2025, before an expected average decline of about 14 percent in 2026, while Robusta prices are expected to decline by about 18 percent.
He pointed out that global production is projected to rise to about 177.5 million bags during the 2025/26 season, an increase of about 2 percent compared to the previous season. However, the market experienced renewed volatility in July 2026, demonstrating the continued impact of climate change, stock levels, and geopolitical developments on prices.
Climate change directly affects crop quantity and quality, while disruptions in the Strait of Hormuz have an indirect but significant impact through energy, shipping, fertilizer, and marine insurance prices.
Higher logistics costs
According to the International Coffee Organization, disruptions in the Strait of Hormuz between the end of February and the end of April 2026 led to a 55.8 percent increase in crude oil prices, a 43.6 percent rise in shipping costs, and a 47 percent increase in urea prices. These are key components in the cost of producing, transporting, and exporting coffee, even though the majority of producing countries are located outside the Gulf region.
However, the impact of these disruptions alone was not enough to drive coffee prices to a sustained high, as improved crop and global supply forecasts exerted downward pressure on prices. Consequently, the ICO Composite Price Index fell by 2.7 percent in April 2026 compared to March, despite the increases in shipping and energy costs.
For the Saudi market, the impact may be more pronounced on shipping, insurance, and storage costs, given that a large portion of the market relies on imports, as well as the possibility of some shipments being delayed or rerouted through alternative ports and routes.
Regarding the local market, Al-Malki said rising global prices have increased the cost of purchasing green coffee beans, as well as shipping, insurance, energy, and storage. This impact has been most pronounced among SMEs that lack long-term supply contracts or significant storage capacity. He added that many roasters and cafes have absorbed some of the price increases to maintain their market share before gradually passing them on to consumers.
According to Trading Economics, Arabica coffee futures prices fluctuated between $3.20 and $3.50 per pound (453 grams), as investors closely monitored weather conditions and harvest progress in Brazil, the world’s largest coffee producer.
Volatility has recently increased as the market has become more sensitive to weather developments due to global supply shortages, prompting investors to quickly adjust their positions.
