Tag: Coffee Market

US Roasters Tear Through Coffee Stocks Waiting for Brazil Trade Deal

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New York – Qahwa World

Coffee roasters in the United States are depleting their stockpiles while waiting for the outcome of ongoing U.S.–Brazil trade negotiations — talks that could determine whether they must continue paying higher prices for alternative coffee sources.

Brazil, which supplies about one-third of the beans consumed by the world’s largest coffee market, has been effectively priced out of the U.S. since August, when President Donald Trump’s administration imposed a 50% import tariff on Brazilian coffee — a move widely viewed as politically motivated.

The tariff was seen as retaliation against Brazil’s left-wing President Luiz Inacio Lula da Silva, following tensions with the U.S. over his predecessor Jair Bolsonaro. The measure has disrupted the $340-billion U.S. coffee industry, leaving importers with stranded shipments, roasters cancelling deliveries, and consumers paying up to 40% more for coffee.

Industry estimates suggest U.S. coffee stockpiles will reach minimal levels by December. Some importers were forced to pay the 50% duty on cargoes booked before the tariff, while others redirected shipments to avoid it.

Steven Walter Thomas, owner of U.S. importer Lucatelli Coffee, said the tariff is “punitive, political, and personal — between Trump and Lula.” His company stored $720,000 worth of Brazilian coffee in a bonded warehouse in Florida to delay import taxes, while diverting some shipments to Canada to avoid the tariff, despite higher transport costs.

The cost surge has also squeezed major players such as Starbucks, whose CEO Cathy Smith said high coffee prices will remain a “headwind” through at least mid-2026.

Smaller roasters are feeling the pressure too. Downeast Coffee Roasters in Rhode Island said it managed to cancel some Brazilian orders but still faces rising costs for alternatives. Cancellation fees reached $20–$25 per 60-kg bag, on cargoes worth about $250,000 per container.

With Brazil largely off the U.S. market, prices for substitutes from Colombia, Mexico, and Central America have risen around 10%, while Brazilian prices have fallen about 5%.

Retail coffee prices in the U.S. climbed 41% year-on-year in September, reaching an average of $9.14 per pound, according to the Bureau of Labor Statistics — a key driver of food inflation. Tight supply and record-high Arabica futures on the ICE exchange continue to fuel the trend.

“I’m not looking too much into brands anymore — I’m going for the deals,” said Sherryl Legyin, a cashier from New Jersey.
“It used to be $6 or $7, now it’s $11,” added travel agent Yasmin Vazquez.

Traders estimate U.S. stocks at about 4 million 60-kg bags, likely to drop to 2.5–3 million by December — close to minimum operational levels. The U.S. typically consumes 25 million bags per year, with 8 million coming from Brazil.

President Lula said he remains optimistic that a trade deal with Washington could come “faster than anyone thinks.”
Trump responded cautiously: “I don’t know if anything’s going to happen, but we’ll see.”

Until then, the price of an American cup of coffee is expected to stay high.

Falling Inventories and Trade Tensions Revive Momentum in Coffee Prices

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Coffee prices rose on Wednesday as shrinking ICE inventories and ongoing trade tensions between the United States and Brazil brought renewed momentum to the global coffee market.

December Arabica coffee (KCZ25) closed up +2.80 (+0.72%), while January Robusta coffee (RMF26) finished +145 (+3.25%) higher.

ICE-monitored Arabica inventories fell to a 1.5-year low of 446,475 bags, while Robusta stocks dropped to a 3.25-month low of 6,111 lots. This sharp decline follows the 50% tariffs imposed by the United States on imports of Brazilian coffee, prompting many American buyers to cancel new contracts. Brazil typically supplies about one-third of the U.S. unroasted coffee, tightening domestic supply.

Earlier this week, forecasts of rain in Brazil temporarily pressured prices. Meteorological agency Somar Meteorologia reported that Minas Gerais—the country’s largest Arabica-producing state—received only 0.3 mm of rainfall in the week ending October 24, or just 1% of the historical average. While upcoming rainfall could ease dry conditions, concerns remain about the impact on the critical flowering period for the 2026/27 crop.

Speculation is also mounting that the United States may lift tariffs on Brazilian coffee. Brazilian President Luiz Inácio Lula da Silva said he had a “surprisingly good” meeting with U.S. President Donald Trump on the sidelines of the ASEAN Summit in Malaysia, adding that a “definitive solution” on trade could be reached within days.

Last week, Arabica coffee prices hit an 8.5-month high amid fears that prolonged drought in Brazil’s growing regions could threaten the 2026/27 harvest. According to Bloomberg’s Brazil Weather Analysis, Minas Gerais has received only 70% of its average monthly rainfall over the past month.

Prices also gained support after the U.S. National Oceanic and Atmospheric Administration (NOAA) raised the probability of a La Niña weather pattern to 71% between October and December, a development that could intensify dry conditions across Brazil and further impact production.

Meanwhile, Robusta coffee faced pressure from an increase in Vietnamese supply. Vietnam’s National Statistics Office reported that coffee exports rose 10.9% year-on-year between January and September 2025 to 1.23 million metric tons. The Vietnam Coffee and Cocoa Association (Vicofa) forecasts that 2025/26 coffee production could rise 10% if weather conditions remain favorable, reaching 1.76 MMT (29.4 million bags) — a four-year high.

At the global level, the International Coffee Organization (ICO) reported that world coffee exports for the current marketing year (October–August) increased 0.2% year-on-year to 127.92 million bags, indicating adequate global supply.

In Brazil, crop forecasting agency Conab revised its 2025 Arabica coffee crop estimate down by 4.9% to 35.2 million bags, while lowering its total coffee production estimate by 0.9% to 55.2 million bags.

According to the U.S. Department of Agriculture’s Foreign Agriculture Service (FAS), global coffee production for 2025/26 is projected to increase 2.5% year-on-year to a record 178.68 million bags, with Arabica output expected to decline 1.7% to 97.02 million bags and Robusta production to rise 7.9% to 81.66 million bags. Brazil’s output is projected to increase 0.5% to 65 million bags, while Vietnam’s could grow 6.9% to 31 million bags.

Global ending stocks are forecast to rise 4.9% to 22.82 million bags, compared with 21.75 million bags in 2024/25.

Easing Weather Threats in Brazil and Vietnam Weigh on Coffee Prices

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Coffee prices dropped sharply on Thursday after giving up early gains, with December Arabica down 2.54% and November Robusta falling 3.9%.

The decline came as weather conditions improved in two of the world’s largest coffee-producing countries. Forecasts from Brazil’s Climatempo predicted weekend rains across the coffee-growing regions, while Vietnam’s weather office reduced the likelihood of heavy rainfall from Tropical Storm Fengshen over the Central Highlands—its main coffee belt—lessening the risk of crop damage.

In Brazil, prices had earlier rallied on concerns over severe drought during the flowering phase of coffee trees, which is critical for the 2026/27 harvest. The state of Minas Gerais, the country’s largest Arabica-producing region, received only about 70% of its average rainfall in the past month.

In contrast, Robusta prices faced downward pressure following data from Vietnam’s National Statistics Office showing that the country’s coffee exports from January to September 2025 rose +10.9% year-on-year to 1.23 MMT. Production for 2025/26 is forecast to rise +6% to 1.76 MMT (approximately 29.4 million bags), the highest level in four years.

Lower inventories on the Intercontinental Exchange (ICE) provided only partial support. ICE-monitored Arabica stocks fell to a 19-month low of 465,910 bags, while Robusta stocks hit a 3-month low of 6,141 lots.

Optimism surrounding trade talks between the United States and Brazil also weighed on prices. Reports suggest discussions may lead to the removal of the 50% tariffs currently imposed on Brazilian imports, a move that could ease supply constraints in the U.S. market.

Meanwhile, International Coffee Organization (ICO) data showed that global coffee exports for the current 2024/25 season (October–August) rose +0.2% to 127.92 million bags, indicating ample supply.

Brazil’s crop forecasting agency Conab lowered its 2025 harvest estimate to 55.2 million bags (-0.9% from May), reducing Arabica output to 35.2 million bags (-4.9%).

According to the U.S. Department of Agriculture (USDA), global coffee production in 2025/26 is expected to rise +2.5% to a record 178.68 million bags, driven by a +7.9% increase in Robusta to 81.65 million bags, despite a -1.7% decline in Arabica output.

Trading company Volcafe projects a global Arabica deficit of 8.5 million bags for 2025/26—wider than the 5.5 million-bag shortfall recorded in 2024/25 and marking the fifth consecutive year of supply deficits.

Rains in Brazil and Tariff Hopes Shake Global Coffee Markets

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Dubai – Qahwa World

The global coffee market experienced another week of turbulence as changing weather conditions in Brazil and renewed hopes for a U.S.–Brazil trade deal sent Arabica prices on a volatile ride. December Arabica futures opened the week of October 13 at 373.20 cents per pound, marking the weekly low, climbed to 418.50 cents on Wednesday, and closed Friday at 397.45 cents per pound. The 45.30-cent range reflected a market increasingly driven by both climate and political signals.

The week began with upward momentum, supported by a stronger Brazilian Real and dry weather forecasts across southeastern Brazil. However, optimism faded midweek as rainfall finally reached the coffee-growing regions. Brazil’s Somar Meteorologia reported significant precipitation in Minas Gerais, the country’s largest Arabica-producing state, with further showers expected through the week. The long-awaited rains prompted traders to liquidate long positions, easing the price rally that had dominated previous sessions.

Market sentiment shifted further when U.S. President Donald Trump announced plans to meet Brazilian President Luiz Inácio Lula da Silva to discuss trade cooperation. The news sparked speculation that the two countries might resolve the ongoing tariff dispute affecting coffee exports. Brazilian coffee currently faces a 50% import tariff in the U.S., and even the prospect of relief was enough to trigger additional selling pressure. Analysts cautioned that, while both governments have expressed willingness to negotiate, no official policy change has yet been confirmed, leaving American buyers facing the same challenges in securing Brazilian coffee.

In Brazil, farmers welcomed the long-awaited rainfall after weeks of drought, though experts noted that one week of showers will not immediately reverse months of stress endured by coffee trees. The timing and consistency of upcoming rainfall will be critical to support flowering and the next harvest cycle. While weather conditions dominated origin discussions, another noteworthy development came from West Africa. Liberia announced plans to introduce Coffee Liberica as its national flagship crop under the FAO’s One Country One Priority Product initiative, expected to launch in December 2025. The program aims to elevate the indigenous Liberica species to global recognition alongside Arabica and Robusta, potentially revitalizing Liberia’s agribusiness sector by creating jobs, attracting investment, and expanding its international presence. Although Liberica remains unfamiliar to many consumers, industry observers believe this move could generate renewed curiosity and demand for the rare variety.

In currency markets, the U.S. Dollar Index traded within a narrow range as traders monitored political developments and awaited signals from the Federal Reserve, which entered its communication blackout period ahead of its next policy meeting. Concerns about a potential government shutdown in the United States persisted but lacked the urgency seen earlier in the month. Both the British Pound and the Euro strengthened modestly against the Dollar as global markets remained steady. By the end of the week, GBP/USD stood at 1.34 and EUR/USD at 1.165, marking a calm close to an otherwise eventful week in the coffee and currency markets.

Dubai: The Next Global Coffee Trade Nexus

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Dubai is rapidly establishing itself as one of the world’s most influential players in the international coffee trade. Once renowned for its dominance in gold, oil, and logistics, the emirate is now redefining itself as a global coffee hub connecting producing countries in Africa, Asia, and Latin America with consuming markets across Europe, the Middle East, and North America. With its strategic location, advanced infrastructure, and thriving specialty coffee culture, Dubai is emerging as the next global nexus of the coffee industry.

Coffee is far more than a daily beverage — it is a $200 billion global economy that sustains over 25 million smallholder farmers and fuels more than two billion cups consumed every day. Yet the industry is under intense pressure. Climate change, volatile prices, supply chain disruptions, and changing consumer tastes have reshaped global trade dynamics. Amid these challenges, Dubai has positioned itself as a stabilising force that combines innovation, transparency, and accessibility to create new opportunities for producers and traders worldwide.

The Dubai Multi Commodities Centre (DMCC) has been at the forefront of this transformation through its state-of-the-art Coffee Centre located in the Jebel Ali Free Zone. The facility offers integrated services for roasting, storage, packaging, logistics, and trade, serving more than 300 members across the global coffee value chain. Designed on a pay-as-you-go model, it allows small producers and independent traders to access world markets without the burden of fixed commitments. According to Mike Butler, Associate Director of Coffee at DMCC, this flexible approach “makes the Coffee Centre extremely friendly for small businesses” and allows them to scale as they grow.

“Dubai is defining the global trend in specialty coffee today,” said Garfield Kerr, President of the Specialty Coffee Association (SCA) and founder of Mokha1450. “In Dubai, coffee functions like wine elsewhere — it’s a cultural experience built around craftsmanship and taste.” Over the past decade, independent roasteries and boutique cafés have replaced international chains across the city. Consumers have become increasingly informed about freshness, roast profiles, and sustainability, pushing the market toward higher quality and transparency.

Dubai’s geographical advantage is another factor behind its success. Situated almost exactly between the world’s top producing nations — Brazil, Vietnam, Colombia, Indonesia, and Ethiopia — the emirate offers unmatched access to global shipping routes. Its proximity to East Africa, one of the fastest-growing specialty coffee regions, gives it a natural advantage over traditional European hubs. “If you map the world’s major coffee producers, Dubai sits almost exactly in the centre,” Butler explained. “It’s only a matter of time before Dubai challenges Hamburg as the global leader in coffee trade.”

The DMCC Coffee Centre’s Tradeflow platform has introduced a new level of digital transparency to an industry often criticised for its opacity. Every batch traded through the system is physically verified and stored within the centre’s temperature-controlled facility, ensuring quality and trust between producers and buyers. By integrating blockchain-based traceability and tokenised finance options, DMCC has reduced intermediaries and opened new financing channels for smallholder farmers. Its partnership with the African Fine Coffees Association (AFCA) further supports African producers through logistics, warehousing, and buyer introductions, helping them retain greater value from their exports.

Dubai’s rise as a coffee capital is also cultural. The World of Coffee Dubai exhibition, held annually at the Dubai World Trade Centre, has become a magnet for industry leaders and enthusiasts alike. The 2025 edition drew nearly 17,000 visitors and 2,000 exhibitors, hosting auctions of the world’s rarest coffees and showcasing 131 debut brands — three-quarters of them international. “The world showed up,” said Kerr. “The coffee innovation coming out of Dubai is now influencing global trends.”

As global coffee trade evolves, sustainability has become central to Dubai’s vision. The emirate is investing in climate-smart agriculture, low-carbon logistics, and advanced digital systems that track environmental compliance. Experts warn that by 2050, up to half of existing coffee-growing land could become unsuitable due to rising temperatures, making adaptation essential. Initiatives such as agroforestry, drought-resistant varieties, and circular-economy recycling of coffee by-products are gaining momentum.

Through innovation and technology, Dubai is setting new standards for transparency and sustainability in coffee trading. Artificial intelligence now supports quality monitoring, while blockchain ensures traceable supply chains. Companies are exploring compostable packaging, recycling capsules, and transforming used coffee grounds into new products, aligning commerce with environmental responsibility.

“Whether it’s the supermarket, the sports club, or the cinema, coffee standards are rising everywhere,” Butler observed. “Dubai is uniquely positioned to lead this evolution, combining innovation, logistics, and sustainability into one cohesive ecosystem.”

In an era of shifting trade routes and unpredictable markets, Dubai has turned its vision into action. The city’s integration of culture, technology, and commerce is rewriting the rules of how coffee is traded and valued. More than a gateway between continents, Dubai has become the command centre of global coffee commerce — a place where beans, business, and innovation converge to shape the future of one of the world’s most beloved drinks.

Finnish Company Paulig Files Applications to Register Five New Trademarks in Russia

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Finnish coffee producer Paulig has filed applications to register five new trademarks in Russia, according to data available in the Rospatent electronic database.

The applications were submitted on October 15 by OY Gustav Paulig Ab, listed as the official applicant. The company reportedly plans to market ground, instant, and roasted coffee, as well as coffee in bags and capsules, under the new trademarks.

Paulig had previously announced its withdrawal from the Russian market in March 2022, following the beginning of the special military operation in Ukraine. By May 2022, the company had completed the sale of its Russian business to Vikas Soin, a private investor from India who acquired Paulig Rus LLC.

Earlier, in November 2021, Paulig had also halted the supply of its popular Santa Maria spices and sauces to Russia, which were part of the company’s broader product portfolio.

Meanwhile, other international brands have taken similar steps. The Spanish group Inditex, which owns Zara and Bershka, has also re-registered its trademarks in Russia, valid until 2035, even though it ceased operations in the country in 2022.

U.S.-Made Coffee Remains More Expensive Than Imports Despite Tariffs

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Throughout 2025, U.S. consumers have witnessed a steady rise in prices across nearly all goods following the administration’s decision to impose tariffs on imported products from global trade partners. Coffee has been no exception, even though the United States relies almost entirely on imported beans to satisfy domestic demand.

Data shows that coffee prices rose by 14.5% between July 2024 and July 2025, while roasted and packaged coffee in supermarkets increased by 21.7% between August 2024 and August 2025. These price hikes are largely attributed to tariffs affecting major coffee-producing nations such as Brazil, which supplies around 40% of the world’s coffee, and Vietnam, the second-largest global exporter.

Despite rising international prices, coffee produced within the United States remains significantly more expensive — a trend unlikely to change. Coffee cultivation requires specific geographical and climatic conditions found only in limited areas of the country, most notably Hawaii, where the right soil and altitude allow for small-scale production of high-quality beans. Even so, the total domestic yield accounts for barely 1% of what Americans consume annually.

Experts in both agriculture and finance agree that the United States lacks the natural and environmental capacity to achieve self-sufficiency in coffee production, even if domestic and imported prices were equal. Consumption far exceeds what local producers can supply, and expanding cultivation faces both economic and ecological constraints. The country’s main coffee-growing regions — Hawaii and Puerto Rico — can only cover a fraction of nationwide demand.

While tariff policies are intended to strengthen local industries and reduce reliance on imports, coffee remains a clear exception. Natural limitations make large-scale domestic production unfeasible, and imported coffee continues to be more affordable and abundant despite higher tariffs. Analysts conclude that the American coffee market will remain deeply tied to global supply chains — particularly to producers in Brazil, Vietnam, and Ethiopia — regardless of future policy changes or tariff increases.

Coffee Prices in Russia Soar to 4,000 Rubles per Kilogram

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Coffee prices in Russia have reached an all-time high, with instant coffee exceeding 4,000 rubles per kilogram for the first time. Ground and roasted coffee have also risen sharply, prompting a noticeable decline in demand of 4–11% across categories.

A Steep Climb Over the Past Year

According to Russia’s Federal State Statistics Service (Rosstat), the price of natural instant coffee rose to 4,006 rubles per kilogram in September 2025, up from 3,988 rubles in August — an annual increase of 18.3%. The price of ground and roasted coffee jumped to 1,994 rubles per kilogram, marking a 29.3% rise compared with last year. In the foodservice sector, the average cup of coffee now costs 110.9 rubles, up 13.6% year-on-year.

Analytics from Check Index show that between June and August, the average retail price of coffee reached 829 rubles, 12% higher than in 2024. The average receipt for whole-bean coffee grew by 22% to 1,508 rubles per pack, while instant coffee climbed 11% to 461 rubles. Ground coffee increased by 16% to 650 rubles, and coffee capsules saw a 17% rise to 881 rubles per pack.

Why Coffee Is Getting More Expensive

The primary driver of the surge is the global rise in coffee prices. Over the past year, Arabica prices have increased by 1.5 times, while Robusta surged by 40% in just three months.
The International Coffee Organization (ICO) attributes this to poor harvest conditions in Brazil, the world’s largest producer. Additional pressure has come from U.S. tariffs on Brazilian coffee, which encouraged American roasters to stockpile supplies. European roasters are also building reserves ahead of the EU’s deforestation-free supply regulations.

According to Olga Lebedinskaya, Associate Professor at the Plekhanov Russian University of Economics, domestic factors are also adding strain: inflation, higher transportation costs, international payment difficulties, and rising labor and rental expenses have all contributed to the surge.

“The market has become highly concentrated, leaving few alternative sources,” she explains. In 2025, Brazil overtook Vietnam as Russia’s main coffee supplier. From January to September, Russian companies imported $287.9 million worth of Brazilian coffee beans, nearly double the value imported during the same period in 2024.

Lebedinskaya notes that Laos could become an alternative source, but logistical barriers remain unresolved. “While for Russia this would serve as a niche complement to Brazilian and Vietnamese supplies, for Laos it means diversifying exports without raising costs dramatically,” she said.

What to Expect in 2026

Lebedinskaya forecasts that global price increases will reach Russia’s retail market with a six-month delay, meaning consumers are likely to see new price levels by spring 2026.
“Many coffee shops are already gradually adjusting their prices to soften the impact,” she noted, adding that the traditional tactic of replacing Arabica with cheaper Robusta is no longer effective, as both varieties are now priced nearly equally.

She expects coffee shops to expand their beverage menus by promoting alternatives such as matcha, chicory, and milk-based drinks, while espresso and Americano will likely see the fastest price growth.

According to Alexey Plugov, Director of the Agribusiness Analytical Center AB-Center, 2025 is set to record the highest average global coffee prices since the 1977 coffee crisis. In 2026, he predicts that prices will remain high but fall by 10–15% from 2025 levels.

Tea and Cocoa: Moderate Movements

Rosstat data show that as of October 6, the price of black tea in Russia reached 1,351.9 rubles per kilogram, rising 7.3% over the year — slower than the overall annual inflation rate of 8.1%. According to AB-Center, green tea prices grew by 3.9%, while black tea in bags increased by only 1.6%, averaging 84.7 rubles for a 25-bag pack.

In contrast, cocoa powder prices rose 7.1% year-on-year in September to 1,139 rubles per kilogram. Plugov notes that global tea prices could rise 8–12% in 2026, while cocoa prices may fall 5–10%, though still remaining well above 2022–2023 levels.

Tightening ICE Stocks Push Coffee Futures Higher

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Global coffee futures climbed as stocks registered on the Intercontinental Exchange (ICE) continued to shrink, tightening availability and pushing traders to reprice risk. December Arabica (KCZ25) rose about 1.78%, while November Robusta (RMX25) gained roughly 1.9%, reflecting increased buying interest across both contracts.

The market has been reacting to a notable decline in ICE-tracked inventories: Arabica holdings dropped to roughly 534,665 bags, a low not seen in about 18 months, and Robusta balances fell to near 6,237 lots, the lowest in a few months. A major contributor to tighter U.S. supplies has been new trade barriers: a 50% tariff on Brazilian coffee imports has prompted some American buyers to cancel or delay contracts, and because Brazil supplies about one-third of U.S. unroasted coffee, the effect has been pronounced.

Weather worries have compounded supply concerns. Key Arabica zones in Brazil — notably Minas Gerais — received barely measurable rainfall in early October, raising alarms about the crop’s flowering stage for 2026/27. Forecasters have also increased the odds of a La Niña episode through the October–December window, a pattern that can bring drier conditions to Brazil and add further downside pressure to yields.

Still, the global picture contains mixed signals. The International Coffee Organization reported a small year-on-year rise in exports for the current marketing window, pointing to continuing flows of coffee around the world. At the same time, Vietnam’s strong Robusta shipments — up double digits year-to-date — are helping keep robusta markets supplied.

Brazilian crop agencies and exporters have trimmed recent estimates or recorded export slowdowns: domestic forecasts for Arabica output have been revised lower and export volumes in some months have fallen sharply from year-earlier levels. Conversely, U.S. Department of Agriculture outlooks point to a modest increase in total world production for 2025/26, driven largely by a stronger Robusta harvest, while some trade houses continue to flag an Arabica shortfall.

The interplay of shrinking registered stocks, tariff-driven trade shifts and weather risks leaves prices vulnerable to swings — and keeps market attention trained on inventories, crop forecasts and buyer behavior in the coming weeks.

Coffee Prices Retreat on Rain Forecasts for Brazil

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Coffee prices fell for the second consecutive day on Tuesday as forecasts pointed to rain across key coffee-growing regions in Brazil, easing previous concerns over dry conditions.

December arabica coffee (KCZ25) closed down 1.56% at –5.95, while November ICE robusta (RMX25) slipped 1.27% to –57. According to Climatempo, rainfall is expected to spread from São Paulo to Minas Gerais this week, with some regions receiving over 30 mm of precipitation — a welcome relief for farmers during the critical flowering stage of the 2026/27 crop.

The decline follows Monday’s report from the International Coffee Organization (ICO) showing that global coffee exports between October 2024 and August 2025 rose 0.2% year-on-year to 127.92 million bags, signaling abundant global supply.

Robusta prices also faced pressure from Vietnam, where the National Statistics Office reported that coffee exports from January to September 2025 surged 10.9% to 1.23 million metric tons (MMT), reinforcing supply-driven headwinds.

Just days earlier, coffee prices had hit two-week highs on worries about dry weather in Brazil. Somar Meteorologia reported that Minas Gerais — the nation’s largest arabica region — received only 0.9 mm of rain in the week ending October 4, representing just 3% of the historical average.

Adding to the market’s complexity, U.S. tariffs on Brazilian imports have tightened supply in the American market. The 50% tariff, imposed earlier this year, has led to a sharp drawdown in ICE-monitored inventories, with arabica stocks dropping to a 1.5-year low of 534,665 bags, and robusta stocks to a 2.5-month low of 6,293 lots. Roughly one-third of unroasted coffee consumed in the U.S. originates from Brazil, intensifying the domestic supply strain.

Meanwhile, the National Oceanic and Atmospheric Administration (NOAA) raised the likelihood of a La Niña event in the southern hemisphere to 71% for October–December 2025, potentially signaling drier conditions in Brazil later this year.

Brazil’s national crop forecasting agency Conab recently trimmed its 2025 arabica estimate by 4.9%, down to 35.2 million bags, and revised its total coffee production forecast to 55.2 million bags — a modest decrease from 55.7 million in May.

Earlier, Cecafé, Brazil’s coffee exporters’ council, reported that the country’s July exports fell 28% to 2.7 million bags, bringing total shipments for January–July 2025 down 21% year-on-year to 22.2 million bags.

On the other hand, Vietnam — the world’s largest producer of robusta — is expected to harvest a 4-year-high crop of 1.76 MMT (29.4 million bags) in the 2025/26 season, up 6% year-on-year.

The U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) projects global coffee production for 2025/26 to grow 2.5% year-on-year to a record 178.68 million bags, driven by a 7.9% increase in robusta output to 81.66 million bags, while arabica output is forecast to decline 1.7% to 97.02 million bags. FAS expects ending stocks to climb 4.9% to 22.82 million bags.

Despite these figures, Volcafe foresees a global arabica deficit of 8.5 million bags for 2025/26 — the fifth consecutive year of shortage — widening from 5.5 million bags last season.

Global Coffee Market Reacts to Tariffs, Rate Cuts, and EU Regulation Uncertainty

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The global coffee market navigated a turbulent September as trade tensions, monetary policy shifts, and regulatory uncertainty reshaped investor sentiment and price dynamics. According to the International Coffee Organization’s (ICO) latest Coffee Market Report for September 2025, the sector was influenced by a combination of U.S. tariff policy, an interest rate cut by the Federal Reserve, and developments surrounding the European Union’s Deforestation Regulation (EUDR). Together, these factors created a complex environment of both optimism and caution across producing and consuming regions.

The month began with heightened uncertainty following the decision by the United States to maintain its 50% import tariff on coffee. This came despite a presidential executive order, issued on 8 September, that excluded several commodities from the existing tariff regime. Coffee, however, remained absent from the exemption list, as it is not considered a product that can be sufficiently produced within the U.S. to meet domestic demand. The policy stance kept traders and importers on edge, particularly in light of already tight global supplies and rising domestic roasting costs.

The ICO report noted that the continued imposition of tariffs has dampened export momentum from major producing countries, particularly Brazil, which remains the world’s largest coffee supplier. Exporters faced not only the direct cost of tariffs but also indirect consequences such as higher insurance premiums and delayed shipments. The United States, typically the second-largest destination for Brazilian coffee after Germany, saw imports fall sharply in August — down 46% year-on-year and 26% month-on-month, according to data from Cecafé.

However, as the month progressed, a diplomatic thaw between Washington and Brasília offered a glimmer of optimism. Meetings between senior officials from both countries, held on the sidelines of the United Nations General Assembly in New York, were interpreted by market analysts as a potential first step toward resolving trade tensions. Though no formal changes were announced, the dialogue provided reassurance to traders that punitive tariffs might be reviewed later in the year, especially if inflationary pressure continues to ease in the United States.

Adding to the month’s market developments, the U.S. Federal Reserve cut its benchmark interest rate by 25 basis points on 17 September — its first such move since early 2024. The decision aimed to support economic growth amid signs of slowing consumer spending and lower manufacturing output. For coffee traders, the rate cut brought mixed implications. On one hand, cheaper borrowing encouraged speculative activity in commodity markets, which helped lift prices. On the other, the stronger U.S. dollar that followed the announcement increased costs for buyers using other currencies, especially in emerging markets.

The ICO observed that the daily volatility of the ICO Composite Indicator Price (I-CIP) rose to 13.8% in September, up from 11% the previous month, partly driven by the interplay of monetary and trade factors. The organization emphasized that such fluctuations reflect not only speculation but also genuine uncertainty about the future of trade flows and regulatory frameworks that govern the industry.

In Europe, a different kind of uncertainty unfolded. The European Commissioner for Environment, Oceans, and Fisheries, responsible for overseeing the Deforestation Regulation (EUDR), expressed concern over the readiness of the EU’s technical system for tracing commodities such as coffee, cocoa, and palm oil. The Commissioner admitted that the digital platform designed to monitor compliance might not be fully operational in time for the regulation’s official start date in January 2026. As a result, Brussels is now considering a one-year postponement of the EUDR’s implementation.

This potential delay was met with relief from coffee-producing nations and exporters, many of whom have voiced apprehension over the costs and logistical burdens of compliance. The regulation, adopted in 2023, requires companies importing into the EU to prove that their products do not contribute to deforestation or forest degradation. For coffee, that means exporters must provide precise geolocation data for every farm and ensure traceability across the supply chain. While the regulation aims to promote sustainable trade, several producing countries, including Ethiopia, Uganda, and Honduras, have warned that smaller farmers could be excluded from the European market if compliance deadlines remain too strict.

Market participants see the proposed delay as a temporary reprieve. “It gives exporters and cooperatives valuable time to adjust and strengthen traceability systems,” the ICO noted. However, the organization also cautioned that postponement does not remove the long-term challenge of compliance. Producers who fail to invest in sustainable certification and farm-level data systems risk losing access to the world’s most regulated and high-value coffee market.

By the end of September, the combined effects of tariffs, monetary easing, and policy uncertainty continued to shape market sentiment. The ICO Composite Indicator Price averaged 324.62 US cents per pound, up 9.3% from August, marking the highest level in two years. Yet, behind the price surge lay diverging regional realities: while exporters in Vietnam and Colombia benefited from strong demand and competitive logistics, producers in Brazil and Central America faced rising export costs and political tension around trade access.

The report concluded that these intersecting economic and regulatory developments have pushed the coffee industry into a phase of structural adaptation. With monetary policy softening in the United States, trade negotiations cautiously reopening, and the EU potentially adjusting its sustainability timeline, the final quarter of 2025 is expected to test the industry’s resilience. Analysts agree that while prices may remain high in the short term, long-term stability will depend on how swiftly producers, traders, and regulators can align under a more predictable and sustainable framework.

As the ICO noted, the coffee market of late 2025 is no longer defined solely by supply and demand but by the policies, regulations, and economic instruments that govern it. The cup of coffee on the global stage has never been more entangled with diplomacy, finance, and environmental accountability.

Brazil Set to Overtake Vietnam as the World’s Largest Robusta Coffee Producer

Posted on by Qahwa World

Dubai – Qahwa World

Brazil is on track to surpass Vietnam as the world’s leading producer of robusta coffee, according to a new report by Dutch bank Rabobank. The report highlights Brazil’s growing advantage due to robusta’s resilience to heat, drought, and disease — key traits as climate change increasingly threatens arabica production.

Rabobank estimates Brazil’s robusta output will reach 24.7 million 60-kg bags in 2025, up from 19 million bags in 2020. Meanwhile, Vietnam is projected to produce around 30 million bags in 2025/26, according to the U.S. Department of Agriculture.

Unlike arabica, which offers a milder flavor and is favored by premium brands such as Starbucks and Nespresso, robusta has a stronger taste and higher caffeine content. It is mainly used in instant coffee, espresso blends, and iced beverages.

Over the past five decades, temperatures in Brazil’s key coffee regions have risen by 1.3 to 1.6°C, while rainfall has decreased by up to 211 millimeters. To adapt, Brazilian farmers have increasingly relied on irrigation — now covering 71% of robusta farms — with this figure projected to reach 363,800 hectares by 2040.

Although the initial investment in robusta plantations is high (around $15,700 per hectare), its productivity is 170% higher per hectare than arabica, enabling cost recovery in about four years, Rabobank said.

The report also noted that Brazil has about 28 million hectares of degraded pastureland suitable for deforestation-free agricultural expansion, creating significant room for robusta growth.

Additionally, the EU’s exemption of instant coffee from deforestation regulations could boost global demand for robusta-based products, further accelerating Brazil’s rise in production.

August Export and Market Update

In August 2025, Brazil exported 3.1 million bags (60kg) of coffee — down 17.5% year-on-year (YOY) but up 14.3% compared to July, according to data from Cecafé. Despite the monthly recovery, exporters continue to face difficulties due to adverse weather conditions affecting the arabica harvest and the 50% U.S. tariff introduced in August. Moreover, even with a good harvest pace, coffee has been taking longer to reach exporters this year.

Exports to the United States dropped 46% YOY and 26% from July, totaling 301,000 bags. Despite the sharp decline, the U.S. remained Brazil’s second-largest destination, behind Germany, and continues to be the world’s top coffee importer in 2025.

The barter ratio — the amount of coffee needed to purchase one metric ton of fertilizer — improved significantly in August. Only 1.2 bags (60kg) were required to buy one ton of fertilizer (blend 20-05-20), down 29% from August 2024 (1.7 bags) and 26% from July (1.6 bags). The improvement was driven by rising coffee prices and falling fertilizer prices, particularly for urea, boosting producer profitability.

After several months of decline, coffee prices rebounded sharply in August, with arabica up 31% and conilon (robusta) up 32%. The price rally was fueled by slower Brazilian exports and low global inventories, while the new U.S. tariffs added further volatility. The move has prompted U.S. roasters to seek alternative supply sources. In the short term, the U.S. industry is expected to rely on existing inventories while awaiting potential tariff renegotiations. One immediate workaround has been the use of bonded warehouses, which allow coffee storage without immediate tariff payments. Since the tariff announcement on July 9, certified stocks in New York have fallen by 157,000 bags.

The EU Deforestation Regulation (EUDR) has also influenced trade flows. Anticipating compliance challenges, European buyers increased imports early in 2024, and a similar pattern is expected in the second half of 2025. Data shows that European coffee inventories have been building in recent months.

Weather conditions in August were seasonally dry, which supported the near-complete harvest. However, frost affected some arabica-producing regions, particularly in Cerrado Mineiro, where local cooperatives estimate potential losses of around 412,000 bags for the 2026 crop. While this raises concerns for the next harvest, analysts say the 2026/27 arabica and conilon cycle remains positive overall. In the coming weeks, market attention will turn to rainfall and flowering, as any threat to crop potential could further support coffee price gains.