Tag: Coffee Prices

Arabica Leads the Recovery: Coffee Outperforms Sugar, Cotton, and Cocoa in Q3 2025

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The agricultural commodities sector gained 1.89% in Q3 2025, driven by strong advances in Arabica coffee and frozen concentrated orange juice (FCOJ) futures. Despite the quarterly rise, the sector remained 19.25% below its 2024 closing level, with four of five major agricultural commodities ending lower and two down more than 40%.

Arabica coffee was the best-performing agricultural commodity in Q3, climbing 22.2% amid concerns over Brazil’s crop outlook and posting a 17.23% year-to-date increase. Futures closed at $3.7485 per pound at the end of September and climbed further to $4.0875 by mid-October, marking coffee as the standout performer of 2025 so far.
The monthly chart shows sustained bullish momentum that began in late 2024.

Cocoa, however, led the downside after reaching an all-time high of $12,931 per ton in late 2024. Prices plunged 27.86% in Q3 and 42.19% since the start of 2025, closing at $6,749 per ton in September and falling below $5,900 in mid-October. Analysts point to commodity cyclicality — high prices trigger oversupply, larger inventories, and weaker demand.

World sugar futures (#11) rose 4% in Q3 but are still 16.41% lower year-to-date. Prices settled at 16.10 cents per pound at the end of September, well below the November 2023 peak of 28.14 cents. By mid-October, March 2026 contracts were trading near 15.60 cents, extending the bearish trend.

Cotton prices slipped 0.77% in Q3 and 3.85% year-to-date. Futures closed September at 65.77 cents per pound and hovered slightly lower at around 65 cents in mid-October. Cotton has trended downward since the May 2022 high of $1.5595 per pound, though current levels may offer a foundation for recovery if production contracts due to low prices.

While FCOJ gained 11.90% in Q3, it remained the worst-performing agricultural commodity year-to-date, down 51.04%. Prices fell from a December 2024 record of $5.4315 per pound to $2.4355 by the end of September and slipped below $2 in mid-October.
Analysts note that FCOJ’s limited liquidity amplifies volatility, with low open interest and trading volumes causing sharper price swings.

As Q4 begins, coffee prices remain elevated while cocoa, sugar, cotton, and FCOJ continue to slide. However, sugar and cotton may find cyclical support, as low prices typically drive production cuts, inventory drawdowns, and stronger demand — setting the stage for a rebound.

Weather conditions, crop health, trade policies, and geopolitics will continue to shape volatility across agricultural commodities. While coffee may face corrective pressure after its rally, sugar and cotton appear the most likely candidates for recovery — particularly cotton, which tends to peak in Q1–Q2 amid planting uncertainty. With prices below 66 cents per pound, cotton could emerge as the strongest recovery play for 2026.

“Agricultural commodities led the asset class in 2023 and 2024 but have fallen behind in 2025. Yet, cyclicality remains the driving force — where lows are found, the next rallies begin.”

Nestlé to Reduce Workforce as Part of Cost-Saving Drive

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Nestlé, the Swiss multinational food and beverage corporation, has revealed plans to cut roughly 6% of its global workforce over the next two years as part of a broad efficiency initiative.

Under new CEO Philipp Navratil, the company aims to eliminate about 16,000 positions. Of these, around 12,000 will be in corporate and administrative roles, while the remaining 4,000 will affect manufacturing, logistics, and supply-chain operations.

The job cuts respond to persistent cost pressures and two consecutive quarters of revenue decline. In the first nine months of 2025, Nestlé’s sales fell by 1.9% year-on-year to CHF 65.9 billion ($76.8 billion). Nonetheless, the company credited its coffee and confectionery divisions—underpinned by price increases—for delivering solid growth.

Navratil is pushing to expand Nestlé’s cost-savings target from CHF 2.5 billion to CHF 3 billion by the end of 2027. He described the cuts as “hard but necessary,” noting that while Nestlé’s size offers advantages, it also brings complexity and inefficiencies that must be addressed.

According to the company, the planned reductions in corporate staffing are expected to yield approximately CHF 1 billion in annual savings. Efficiency drives in the production and supply chain segments are intended to support further cost mitigation through automation and operational consolidation.

While Nestlé’s nutrition segment and operations in China were among the weaker performers, the coffee segment showed resilience—even as commodity prices remained elevated and consumer spending softened in many markets.

In particular, the company implemented an average price increase of 7.4% across key coffee and confectionery brands such as Nescafé and Nespresso—moves that helped support growth across all regions. Nestlé also reported strong momentum in its ready-to-drink and coffee concentrate lines, especially in Asian and Oceanic markets.

The decision to downsize globally underscores the intense cost pressures faced by one of the world’s largest food and beverage companies. Even strong-performing sectors like coffee could not completely offset rising production and raw-material expenses, particularly for green coffee and cocoa.

In the coffee commodities market, both Arabica and Robusta prices remain at historically high levels. In September 2025, Arabica futures exceeded $4 per pound for the first time since April, while Robusta prices hovered near $5,694 per tonne—strained by adverse weather, reduced yields in Brazil and Vietnam, and continued supply chain disruptions.

Arabica Coffee Prices Dip as Brazil Rains and Tariff Talks Pressure Market

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Arabica coffee prices fell on Wednesday as forecasts of rainfall in Brazil’s coffee belt and renewed trade discussions between Brazil and the United States triggered selling in the futures market.

On the ICE exchange, December Arabica (KCZ25) dropped by –4.75 points (–1.19%), while November Robusta (RMX25) rose by +55 points (+1.23%). The session began with an upward trend but later reversed, with traders reacting to changing weather expectations and tariff concerns.

Traders who had bet on prolonged dry conditions liquidated positions after new forecasts showed that Brazil’s main coffee-growing regions would receive rain later this week. The shift came just after reports of drought-related stress in Minas Gerais, where rainfall during the week ending October 11 reached only 48% of the historical average, raising concerns for the crucial flowering phase of the 2026/27 crop.

Market sentiment also shifted after Bloomberg reported that Brazilian Foreign Affairs Minister Mauro Vieira is set to meet U.S. Secretary of State Marco Rubio on Thursday to discuss tariffs. The talks come amid ongoing U.S. import tariffs of 50% on Brazilian coffee, which have already reduced shipments and tightened U.S. supplies.

ICE-monitored arabica inventories fell to a 1.5-year low of 494,558 bags, while robusta inventories slipped to 6,200 lots, their lowest in nearly three months. Meanwhile, the NOAA recently raised the likelihood of a La Niña event to 71% for October–December, potentially bringing drier conditions to Brazil and heightening risks for the next harvest.

In contrast, Vietnam’s Central Highlands, the country’s main coffee zone, is forecast to receive above-average rainfall through October 20 — with Dak Lak province expecting 70 mm, compared with a historical average of 61 mm. The favorable weather supports a strong 2025/26 robusta crop, with production projected to rise by 6% year-on-year to 1.76 million tons (29.4 million bags) — a four-year high.

According to the Vietnam National Statistics Office, coffee exports in the first nine months of 2025 climbed 10.9% year-on-year to 1.23 million tons, adding to global supply pressures.

The U.S. Foreign Agricultural Service (FAS) projects 2025/26 global coffee production at a record 178.68 million bags, up 2.5% from the previous year. Arabica output is expected to decline 1.7%, while robusta rises 7.9%.

Brazil’s total coffee production is forecast at 65 million bags, up 0.5%, while Vietnam’s is seen reaching 31 million bags, up 6.9%.

However, global trading firm Volcafe anticipates an arabica deficit of 8.5 million bags for 2025/26 — the fifth consecutive annual shortfall.

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.

Rain Forecasts in Brazil Pressure Arabica Coffee Prices Despite Tight Global Supply

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Arabica coffee prices fell sharply on Thursday as forecasts of much-needed rainfall in Brazil’s key coffee-growing regions eased concerns about prolonged dryness that had recently pushed prices higher. Meanwhile, robusta prices edged up, supported by steady demand and limited inventories.

On the Intercontinental Exchange (ICE), December arabica (KCZ25) closed down –7.85 cents (–2.04%) at 297.05 U.S. cents per pound, while November robusta (RMX25) gained +26 points (+0.57%), reaching a three-week high.

Brazil Weather Outlook

According to Brazilian meteorological agency Climatempo, parts of Minas Gerais — the country’s largest arabica-producing region — could receive up to 30 millimeters of rain this week, a “significant amount” expected to promote flowering for the 2026/27 crop cycle. The prospect of rainfall led to profit-taking after recent price gains fueled by drought concerns.

Earlier this week, Somar Meteorologia reported that Minas Gerais received only 0.9 millimeters of rain during the week ended October 4 — just 3% of the historical average — raising fears of poor flowering and lower yields before these latest forecasts.

Inventory and Trade Developments

While weather news weighed on prices, global supply signals remained tight. ICE-monitored arabica inventories fell to a 1.5-year low of 519,534 bags on Thursday, while robusta inventories hit a 2.5-month low of 6,237 lots. The sharp drawdown is partly linked to the 50% tariff on U.S. imports of Brazilian coffee, which has caused American buyers to void new contracts and tightened U.S. supplies. Brazil accounts for around one-third of America’s unroasted coffee imports.

At the same time, the International Coffee Organization (ICO) reported that global coffee exports for the current marketing year (Oct–Aug) rose by 0.2% year on year to 127.92 million bags, indicating adequate supply in the short term but little room for further tightening.

Production and Export Trends

Brazil’s crop forecaster Conab recently revised down its 2025 arabica crop estimate by 4.9% to 35.2 million bags (from 37 million in May) and cut total coffee output to 55.2 million bags (from 55.7 million). Meanwhile, Cecafé, the Brazilian exporters’ association, said coffee shipments fell 21% in the first seven months of the year to 22.2 million bags and plunged 28% in July alone.

In contrast, Vietnam — the world’s largest producer of robusta — is seeing strong growth. The Vietnam National Statistics Office reported that coffee exports from January to September 2025 rose 10.9% to 1.23 million metric tons, with the 2025/26 harvest expected to increase 6% to 1.76 million tons (29.4 million bags), a four-year high.

Global Outlook

The U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) forecasts global coffee production in 2025/26 to reach a record 178.68 million bags, up 2.5% year on year. Within that total, arabica output is expected to decline 1.7% to 97.02 million bags, while robusta is projected to rise 7.9% to 81.65 million bags. Ending stocks are forecast to increase by 4.9% to 22.82 million bags.

However, trader Volcafe projects a global arabica deficit of 8.5 million bags for 2025/26 — wider than the 5.5 million bag deficit in 2024/25 — marking the fifth consecutive year of shortfall.

Adding to market uncertainty, the U.S. National Oceanic and Atmospheric Administration (NOAA) on September 16 raised the probability of a La Niña event between October and December to 71%. Such conditions can cause dry weather in South America and potentially damage Brazil’s next coffee crop, maintaining a tense balance between short-term relief and long-term risk.

Market Summary

For now, traders remain focused on Brazil’s rainfall patterns and their impact on flowering and yields. If forecasted rains fail to materialize, a renewed price rebound could follow as concerns about crop development resurface. Conversely, consistent rainfall in October could alleviate some supply pressures and bring temporary stability to arabica prices.

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.

Historic Drop in Certified Coffee Stocks Threatens Global Market Stability

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The global coffee market is entering a period of heightened uncertainty as certified coffee stocks fall to their lowest level in years, signaling tightening supply chains and growing pressure on prices. According to the International Coffee Organization’s (ICO) September 2025 Coffee Market Report, both Arabica and Robusta certified inventories saw steep declines, raising alarm among traders and producers about the sustainability of global coffee flows.

The ICO reported that certified Arabica stocks in the United States dropped by 19.3%, falling to 0.66 million 60-kg bags, while certified Robusta stocks in London declined by 4.3% to 1.08 million bags. The organization described these figures as a “clear indicator of tightening supply,” warning that if this trend continues, it could lead to further market volatility and stronger upward pressure on coffee prices into 2026.

The decline in certified stocks comes at a time when global coffee prices are already at a two-year high. The ICO Composite Indicator Price (I-CIP) averaged 324.62 US cents per pound in September — up 9.3% from August and 25.4% year-on-year. This sustained rally reflects a combination of supply shortages, export delays, and speculative momentum, according to the report. Analysts also note that the depletion of certified stocks is a major driver behind the surge, as roasters and traders draw down existing inventories to meet ongoing demand.

In Brazil, the world’s largest coffee producer and exporter, the situation remains complex. Despite a healthy harvest, export performance continues to weaken, with the Brazilian Coffee Exporters Council (Cecafé) reporting a tenth consecutive monthly decline. Shipments have been slowed by logistical congestion at the Port of Santos and delayed customs procedures, resulting in slower replenishment of certified stocks. Much of the crop, although harvested, remains stored domestically awaiting transport — a factor that continues to strain global availability.

Colombia, the world’s top producer of washed Arabica, is also struggling with weather disruptions in key coffee-growing regions and infrastructure setbacks that have limited its export capacity. Meanwhile, Vietnam, the largest Robusta supplier, has maintained stable production but faces supply chain bottlenecks that delay shipments to major consuming markets, particularly Europe and North America.

The ICO emphasized that these combined factors have created a fragile equilibrium in which global coffee demand remains resilient, but the flow of physical supply is insufficient to keep inventories stable. “The rate of certified stock depletion is now nearing levels not seen since 2021,” the report warned, adding that the balance between consumption and production is increasingly difficult to maintain amid logistical and policy-related challenges.

Trade policies are adding further complications. The United States’ 50% import tariff on coffee, still in place as of September 2025, continues to weigh heavily on trade volumes. Many importers have avoided purchasing new shipments at elevated costs, instead relying on existing certified reserves. This has accelerated the drawdown of available stock, pushing certified inventories closer to critical thresholds.

At the same time, monetary policy decisions have influenced speculative activity across commodity markets. The Federal Reserve’s recent 25-basis-point rate cut — its first since 2024 — triggered renewed investor interest in coffee futures, pushing prices even higher. The report noted that this speculative demand has intensified the pressure on physical stocks, as traders anticipate continued price gains and hedge against potential shortages.

The ICO also pointed to regulatory uncertainty in Europe as a factor contributing to the decline in certified inventories. Exporters are recalibrating their shipment schedules due to the forthcoming EU Deforestation Regulation (EUDR), which mandates traceability and geolocation data for coffee imports. While the European Commission has signaled a potential one-year delay in enforcement, many traders are opting to postpone shipments until compliance frameworks are clarified, further limiting short-term supply availability.

Market analysts caution that the combination of depleted stocks, policy delays, and persistent trade restrictions could lead to supply shortages in early 2026 if current trends persist. “The market is walking a fine line,” one analyst cited by the ICO noted. “With certified inventories at record lows, even minor disruptions — whether from weather, logistics, or policy shifts — could have an outsized impact on prices.”

This tightening supply scenario has already been reflected in the futures markets. ICE Arabica prices in New York rose by 11.5% in September, averaging 366.31 US cents per pound, while ICE Robusta prices in London climbed 8.9% to 197.56 US cents per pound. The price differential between the two markets widened by 14.7% to 168.75 US cents per pound, the highest level recorded in 2025. The ICO said the widening gap highlights uneven stock conditions and structural imbalances between Arabica and Robusta markets.

Furthermore, intra-day price volatility increased to 13.8%, compared to 10.6% in August, underscoring how thin inventories amplify market sensitivity to short-term developments. The report noted that low stock levels make the market more reactive to speculative trading, currency fluctuations, and export data releases.

Despite these challenges, some optimism remains tied to upcoming harvests in Central America and East Africa, which could provide temporary relief to global supplies. However, the ICO cautioned that recovery will likely be slow, as high fertilizer and labor costs continue to limit farm investment and productivity gains across several producing countries.

Ultimately, the ICO concluded that the historic decline in certified coffee stocks represents more than a temporary fluctuation — it reflects a deep structural imbalance in the global coffee economy. Persistent trade barriers, logistical delays, and delayed regulatory decisions have combined to restrict availability at a time when global demand remains robust. The report warned that unless export performance and stock replenishment improve by early 2026, the market could face an extended period of high prices and intensified volatility.

As the global coffee sector navigates this critical juncture, the ICO urged stakeholders — from producers to importers — to focus on efficient supply chain management, sustainable farming practices, and regulatory coordination to restore stability to the market. Without such measures, the world’s coffee supply chain risks remaining on edge well into the coming year.

Global Coffee Prices Surge to 2-Year High

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The global coffee market witnessed a significant price surge in September 2025, marking one of the strongest monthly performances in recent years. According to the latest Coffee Market Report issued by the International Coffee Organization (ICO), the ICO Composite Indicator Price (I-CIP) averaged 324.62 US cents per pound, representing a 9.3% increase compared to August 2025 and a striking 25.4% rise year-on-year. The report reveals that while prices rose across all coffee groups, tightening certified stocks and persistent trade uncertainties continue to define the market’s volatile landscape.

The ICO noted that Arabica varieties led the monthly increase, with Colombian Milds climbing 10.1% to 403.77 US cents/lb, Other Milds advancing 9.3% to 400.21 US cents/lb, and Brazilian Naturals gaining 11.3% to 374.91 US cents/lb. Robusta, meanwhile, registered a more moderate yet notable 5.9% increase to 210.85 US cents/lb. The rise was mirrored on both major futures exchanges, with New York ICE prices up 11.5% to 366.31 US cents/lb, and London ICE prices increasing by 8.9% to 197.56 US cents/lb. The I-CIP fluctuated between 298.14 and 360.74 US cents/lb during the month, maintaining a median value of 323.44.

The report attributes much of September’s price escalation to several interconnected macroeconomic and policy-related developments that placed upward pressure on the market during the first half of the month. Among these, concerns over the long-term supply of coffee to the United States stood out, especially given the continued uncertainty surrounding import tariffs. Although on 8 September the U.S. administration issued an executive order revising tariffs for “aligned partners” with established trade agreements, coffee remained excluded from the list. The commodity continues to face a 50% import tariff imposed earlier in the year, as it is not yet categorized among products that the U.S. cannot sufficiently produce domestically. This policy has led to sustained apprehension among traders and exporters, particularly as U.S. certified Arabica stocks continue to decline.

The ICO underlined that certified stocks—used as a short-term substitute for coffee imports—are shrinking at an alarming rate, reinforcing market tightness. U.S. certified stocks of Arabica fell 19.3% in September to 0.66 million 60-kilogram bags, while London-certified Robusta stocks decreased 4.3% to 1.08 million bags. These drawdowns, the report states, indicate that the market is “starting to feel the squeeze,” signaling a bullish outlook for prices if replenishment remains weak.

However, the latter half of September brought developments that introduced downward pressure and tempered speculative enthusiasm. On 15 and 17 September, the ICE Futures U.S. exchange raised margin requirements for Arabica contracts twice in a single week. Higher margin requirements force investors to deposit more capital with brokers to cover increased credit risk, thus raising borrowing costs for both new and existing positions. The ICO explained that such moves can reduce liquidity and limit speculative demand, potentially stabilizing prices in overheated markets.

At the same time, discussions at the United Nations General Assembly between U.S. and Brazilian officials provided a momentary boost to market optimism. As the world’s largest coffee producer and the largest destination market sought to improve bilateral trade relations, investors interpreted the talks as a signal that tariff détente might eventually follow. Brazil’s exports have been under severe strain, declining for ten consecutive months due to both cyclical production factors and logistical issues at the port of Santos.

On the monetary front, the U.S. Federal Reserve’s 25-basis-point interest rate cut on 17 September had a nuanced impact. While the policy was intended to lower borrowing costs across the economy, it indirectly affected coffee prices by making speculative trading less expensive. The ICO noted that cheaper credit may have helped sustain trading volumes, adding volatility to a market already under pressure from tightening supplies.

The European Union also entered the spotlight in September after the EU Commissioner for Environment, Water Resilience and a Competitive Circular Economy raised concerns over the readiness of the EU Deforestation Regulation (EUDR) IT system. The Commissioner indicated that the system might not be able to handle the expected transaction volume, suggesting a possible one-year extension before enforcement begins. The EUDR, which aims to ensure that coffee and other commodities imported into the EU are deforestation-free, has been a major topic of concern among exporters since its adoption, and any delay could temporarily ease compliance-related pressures on coffee-producing nations.

Despite these counterbalancing developments, overall volatility continued to rise. The ICO reported that intra-day volatility of the I-CIP increased by 2.8 percentage points compared to August, averaging 13.8% in September. By category, Colombian Milds and Other Milds showed volatility of 14.0% and 13.7%, respectively, Brazilian Naturals 14.7%, and Robustas 15.0%. At the futures level, New York volatility stood at 15.2%, while London measured 16.2%, reflecting a minor uptick in speculative activity.

Price differentials also widened notably. The Colombian Milds–Other Milds differential expanded from 0.41 to 3.56 US cents/lb, while the Colombian Milds–Robustas differential rose 15.1% to 192.92 US cents/lb. The arbitrage between the London and New York markets, a key indicator of the spread between Arabica and Robusta, widened by 14.7% to 168.75 US cents/lb, the highest level of the year.

Overall, the ICO described September as a month defined by tightening supplies, speculative activity, and geopolitical uncertainty. The consistent decline in certified stocks, combined with unresolved tariff tensions and potential EUDR delays, continues to reinforce a bullish sentiment across the market. As the fourth quarter of 2025 begins, analysts expect coffee prices to remain elevated, with volatility likely to persist until structural issues—such as logistics bottlenecks, regulatory clarity, and weather-related production concerns—are addressed.

In summary, the ICO’s latest data depict a coffee market under strain but also opportunity. Prices are buoyed by constrained supply and investor sentiment, while trade policies and financial dynamics continue to influence short-term movements. With the I-CIP climbing above 320 US cents/lb for the first time in over two years and certified stocks hitting new lows, September 2025 may well be remembered as a turning point in the evolving balance between global coffee supply and demand.

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

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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.

US Congress Moves to Exempt Coffee from Tariffs

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Dubai – Qahwa World 

A bipartisan bill titled the “No Coffee Tax Act” has been introduced to the United States Congress, aiming to repeal tariffs placed on coffee imports under the Trump administration.

The United States is the largest coffee importer in the world, with production limited only to Hawaii and Puerto Rico. Yet, tariffs currently affect major exporting nations. Goods from Brazil face a 50% tariff, Vietnam 20%, India 50%, Mexico 25%, and Indonesia 19%, all above the administration’s base rate of 10%.

The bill, sponsored by Nebraska Representative Don Bacon and California Representative Ro Khanna, has already drawn support from Virginia’s Don Beyer and New Hampshire’s Maggie Goodlander.

Bacon emphasised that taxing a crop not grown at scale in the US is harmful to consumers: “Families across America are already paying 21% more for coffee. Tariffs on a product we cannot produce commercially only make things worse. They are simply a tax on consumers, raising costs without creating jobs.”

He further highlighted that Congress, under Article One of the Constitution, holds tariff-setting authority, and this legislation reasserts that power.

If passed, the bill would exempt coffee—green, roasted, decaffeinated, husks, skins, and substitutes containing coffee—from any tariffs imposed after January 19, 2025.

The US coffee industry has strongly supported the measure, arguing that coffee cannot be grown at a scale sufficient to meet demand. A petition launched by roaster Coffee Bros in April 2025 has already gathered nearly 15,000 signatures.

Khanna compared the tariffs to Britain’s tax on tea before the American Revolution: “Americans started a revolution over a tax on tea. Today, US coffee prices have surged in part due to these tariffs. Our bipartisan bill is simple—it removes Trump’s tariffs on coffee to bring down costs.”

According to Reuters, the legislation is expected to be formally introduced on Friday. Bacon expressed optimism that the measure would not only reduce prices for consumers but also prompt a wider debate on Congress reclaiming its constitutional role in tariff policy.

Coffee Prices Mixed as Robusta Surges and Arabica Faces U.S. Tariff Pressure

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Dubai – Qahwa World

Coffee futures ended Monday in mixed territory as robusta prices climbed on concerns over heavy rains in Vietnam, while arabica remained under pressure from uncertainty surrounding U.S. tariff policy and ongoing harvest progress in Brazil. December arabica (KCZ25) fluctuated during the session and ultimately closed down -1.50 (-0.41%), while November robusta (RMX25) gained +121 (+2.93%).

The sharp rise in robusta was fueled by forecasts of heavy rainfall across Vietnam’s Central Highlands, the country’s key growing area, which could damage cherries entering their final stage of development before harvest. Vietnam, the world’s largest producer of robusta, continues to play a decisive role in global market movements. Despite the short-term weather risks, the country is still expected to deliver a bumper crop, with 2025/26 production projected to climb 6% year-on-year to 1.76 million metric tons, or 29.4 million bags, the highest level in four years. Export momentum remains strong as well, with shipments from January to August up 7.8% compared with the previous year, reaching 1.141 million metric tons.

Arabica, meanwhile, faced renewed selling pressure linked to the policy debate in Washington, where lawmakers are considering a bill that would exempt coffee imports from tariffs. The United States currently maintains a 50% tariff on Brazilian imports, a measure that has disrupted traditional trade flows and forced buyers to cancel contracts. This has tightened U.S. supplies significantly, with ICE-monitored arabica inventories falling to a 17-month low of 643,341 bags. Robusta inventories also dropped to a 1.75-month low of 6,464 lots. The trade impact is considerable, since Brazil accounts for roughly one-third of America’s unroasted coffee imports.

While tariffs weigh on demand for arabica, supply-side pressures in Brazil are offering a degree of support. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica-producing state, received only 10.5 millimeters of rain during the week ending September 20, representing just 73% of the historical average. September is a critical flowering month for coffee trees, and any shortage of rain could compromise the next crop cycle. Earlier this month, Brazil’s crop agency Conab cut its forecast for the 2025 arabica harvest by 4.9% to 35.2 million bags and lowered total coffee production to 55.2 million bags, reinforcing concerns about supply.

Globally, the balance remains tight despite expectations of record output. The USDA’s Foreign Agriculture Service projects that world coffee production will increase by 2.5% in 2025/26 to reach 178.68 million bags. Arabica output, however, is forecast to decline 1.7% to 97 million bags, while robusta is expected to rise by nearly 8% to 81.6 million bags. This uneven growth underlines the structural imbalance in the market. Commodity trader Volcafe has warned that the arabica deficit will widen to 8.5 million bags in 2025/26, compared with 5.5 million bags in the previous cycle, marking the fifth consecutive year of shortfalls.

Export figures add further weight to bullish sentiment. The International Coffee Organization reported earlier this month that global shipments in July fell 1.6% year-on-year to 11.6 million bags, while cumulative exports for the first ten months of the current season declined 0.3%. Brazil’s shipments saw particularly sharp declines. Data from the Trade Ministry showed that unroasted coffee exports in July plunged 20.4% to 161,000 metric tons, while exporter group Cecafe reported green coffee shipments down 28% to 2.4 million bags. Robusta exports collapsed by nearly half. In total, Brazil’s shipments between January and July dropped 21% to 22.2 million bags.

In the short term, harvest pressure continues to weigh on arabica prices. Brazil’s Cooxupe cooperative, the country’s largest exporter group, reported that its members had completed 98.9% of the harvest by September 12, signaling that near-term supply remains ample. Yet market participants remain cautious about the months ahead, with the National Oceanic and Atmospheric Administration forecasting a 71% chance of La Niña developing between October and December. Such a weather pattern could intensify drought conditions in Brazil and place the 2026/27 crop at risk.

The global coffee market thus finds itself pulled in opposite directions. On one side, robusta prices are supported by immediate weather risks in Vietnam, while arabica is weighed down by trade policy uncertainty and harvest dynamics in Brazil. On the other, tightening inventories, shrinking exports, and the prospect of continued arabica deficits provide a strong bullish undertone. With weather volatility and geopolitical trade policies both in play, analysts expect price swings to remain a defining feature of the market for months to come.