Dollar Strength and Brazil Crop Pressure Coffee Prices

Dubai – Qahwa World

Coffee prices moved lower as a stronger dollar and expectations of a record Brazilian crop continued to weigh on the market, while a mix of supply, weather, and trade factors shaped overall sentiment.

May arabica coffee fell by 0.95 points, or 0.32%, while May robusta declined by 48 points, or 1.36%, reflecting pressure linked to currency strength and improving supply expectations.

The outlook for Brazil’s next crop remains a central driver. Marex Group projected the country’s 2026 and 2027 coffee production at a record 75.9 million bags, exceeding Sucafina’s estimate of 75.4 million bags, which represents a 15.5% increase year on year. Earlier in the month, StoneX raised its forecast to 75.3 million bags, up from a previous estimate of 70.7 million bags.

Despite this pressure, tight supplies of robusta coffee provided some support. Inventories monitored by the exchange fell to 4,093 lots, the lowest level in three and a half months. In contrast, arabica inventories rose to 585,621 bags, marking a six and a quarter month high and adding further downward pressure on prices.

Global logistics disruptions added complexity to the market. The closure of the Strait of Hormuz has affected shipping flows, increasing freight rates, insurance costs, and fuel expenses, raising costs for importers and roasters while tightening supply chains.

Weather conditions in Brazil also played a role. Rainfall in Minas Gerais, the country’s largest arabica-producing region, reached 11.7 millimeters last week, or 47% of the historical average, according to Somar Meteorologia. Below-normal rainfall typically supports prices, though this effect has been offset by broader supply expectations.

Trade data provided mixed signals. Brazil’s green coffee exports in February fell by 27% year on year to 2.3 million bags, according to Cecafe. Meanwhile, the country’s Trade Ministry reported that total coffee exports declined by 17.4% over the same period to 142,000 metric tons, offering some underlying support.

Earlier this year, coffee prices had already faced significant pressure. In February, arabica dropped to a 16.25-month low as expectations of a large Brazilian crop strengthened the global supply outlook. Brazil’s crop agency Conab said production in 2026 is expected to rise by 17.2% year on year to a record 66.2 million bags, including a 23.2% increase in arabica to 44.1 million bags and a 6.3% rise in robusta to 22.1 million bags.

At the global level, Rabobank projected that coffee production will reach a record 180 million bags in the 2026 and 2027 season, up by about 8 million bags from the previous year.

Vietnam, the world’s largest producer of robusta coffee, added to bearish sentiment. The country reported a 14% increase in exports during the first two months of 2026 to 366,000 metric tons. Exports for 2025 rose by 17.5% to 1.58 million metric tons, while production for the 2025 and 2026 season is expected to increase by 6% to a four-year high of 29.4 million bags.

Additional data from the International Coffee Organization showed that global coffee exports for the current marketing year edged down by 0.3% to 138.658 million bags.

Meanwhile, the U.S. Department of Agriculture’s Foreign Agriculture Service projected that global coffee production for the 2025 and 2026 season will increase by 2% to a record 178.848 million bags. The report also indicated a 4.7% decline in arabica production to 95.515 million bags and a 10.9% increase in robusta output to 83.333 million bags.

The agency expects Brazil’s production for the same season to fall by 3.1% to 63 million bags, while Vietnam’s output is forecast to rise by 6.2% to 30.8 million bags. Ending stocks are projected to decline by 5.4% to 20.148 million bags, down from 21.307 million bags in the previous season.

Together, these factors highlight a market caught between rising global supply expectations and ongoing logistical disruptions, weather concerns, and shifting inventory levels, leaving coffee prices under continued pressure.

Arabica Drops, Robusta Rises Amid Global Coffee Supply

Dubai – Qahwa World

Global coffee prices showed mixed trends this week. Arabica coffee declined to a one-and-a-half-week low, while Robusta coffee gained support from tight supply conditions.

The main pressure on Arabica prices comes from forecasts of a record Brazil coffee crop, the world’s largest coffee producer. Several international agencies raised estimates for the 2026/27 season to around 75 million bags, a strong year-on-year increase boosting the global supply outlook.

Despite climatic challenges, such as below-average rainfall in key regions like Minas Gerais, Brazilian production continues to rise.

The strength of the Brazilian real limited Arabica losses by reaching a three-week high against the U.S. dollar, reducing exporters’ incentives to sell.

Meanwhile, Robusta coffee prices were supported by falling ICE-certified inventories to a 3.5-month low, reflecting tight supply amid strong demand, especially for instant coffee production.

Global logistics disruptions, including the closure of the Strait of Hormuz, increased shipping, insurance, and fuel costs, affecting importers and roasters worldwide.

Market pressures persist due to rising Arabica inventories and declining Brazilian green coffee exports, reflecting fluctuations in the global coffee market.

Globally, coffee production is expected to reach record levels in 2026/27, driven mainly by Robusta growth. Vietnam, the largest Robusta producer, continues to expand exports and output, adding downward pressure on prices.

Overall, the global coffee market reflects a delicate balance between abundant Arabica supplies and relatively tight Robusta stocks, along with climate effects, currency fluctuations, and logistical challenges, keeping prices volatile in the near term.

Coffee Slides on Supply Surge Signals

London – Qahwa World

Coffee futures dropped notably, with arabica hitting its lowest level in about a week and robusta sinking to a multi-month low. The decline comes as expectations grow for a significantly larger global supply, led by Brazil.

Forecasts from multiple analysts point to a record-breaking Brazilian harvest in the 2026/27 season, with estimates clustering around the mid-70 million bag range—marking a strong year-over-year increase. This optimistic outlook has weighed heavily on prices in recent sessions.

The downturn intensified as the U.S. dollar strengthened to its highest level in over ten months, adding further pressure to commodity markets, including coffee.

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Despite the broader bearish tone, some factors are offering support—particularly for robusta. Exchange-monitored inventories have tightened recently, signaling short-term supply constraints.

Logistical challenges have also emerged as shipping disruptions in key global routes have pushed up freight, insurance, and fuel costs, indirectly impacting coffee trade flows and pricing dynamics.

Weather conditions in Brazil remain another point of concern. Key growing regions have received less rainfall than usual, which could affect crop development if dryness persists.

On the inventory front, Arabica stocks tracked by exchanges have been rising, contributing to downward pressure on prices.

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Export data adds a mixed picture. Brazil reported a sharp decline in green coffee shipments in February compared to last year, alongside a broader drop in total coffee exports.

Earlier in the year, prices had already come under pressure following projections of a bumper crop in Brazil. Government and private forecasts have consistently pointed to strong production growth, especially in arabica output.

Globally, coffee supply is expected to expand further. Estimates suggest total production could reach new highs in the upcoming season, supported by gains in both Brazil and Vietnam.

Vietnam, the leading robusta producer, continues to boost exports, with shipments rising in the early months of the year. Production is also expected to increase, adding to global availability.

Meanwhile, some international data indicates only a slight dip in global exports so far this season, while overall production forecasts remain strong. However, ending stock levels are expected to tighten modestly, reflecting steady demand.

Coffee rallies hard as supply tightens and money flows back into the market

Dubai – Qahwa World

You can feel it again—the market is tightening, and coffee is responding exactly the way it tends to when physical supply starts to disappear.

Over the past week, coffee prices pushed sharply higher, and this wasn’t just a technical move. It’s a combination the industry knows well: weaker exports from origin countries and fresh speculative money stepping back in. That mix rarely stays quiet for long.

Arabica for May delivery jumped 8.6% to around $6,828 per tonne, while robusta added another 6%, reaching $6,664. Both markets are moving in sync, which usually tells you this isn’t a localised issue—it’s systemic.

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At the same time, the broader commodity space is sending mixed signals. Silver dropped heavily under the weight of high interest rates, while coffee moved the other way. That divergence says a lot about where capital is going: away from passive holdings and into markets where supply risk is real and immediate.

  • And right now, coffee has plenty of that.

The geopolitical backdrop isn’t helping. Tensions in the Middle East have started to interfere with shipping through the Strait of Hormuz, pushing oil prices higher. For coffee producers, that translates directly into higher costs — fuel, fertilisers, transport — everything gets more expensive. Eventually, those costs show up in the price of coffee.

But the bigger story is still supply.

Exports from the major producers are clearly slowing:

Brazil saw green coffee exports drop 27% year-on-year in February
Vietnam was down 20%
Colombia fell even harder, down 32%

Those are not small adjustments — that’s a meaningful contraction across all key origins at the same time.

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What’s more telling is what’s happening on the exchange. ICE stocks — the market’s safety cushion — are still about 30% below last year, sitting just above 552,000 bags. And Brazilian coffee makes up only a tiny share of that, roughly 4%.

That’s important. When Brazil isn’t showing up in exchange stocks, it usually means producers aren’t satisfied with current price levels — or simply don’t feel pressure to sell. Either way, it tightens the market further.

On top of that, funds are coming back in. Managed money increased its net long position in arabica by nearly 30% in just one reporting period. That kind of move doesn’t happen unless confidence — or urgency — is building.

Locally, in Vietnam’s Central Highlands, prices followed the global trend, climbing to around 94,000 dong per kilo. That’s a strong move in a short time, and it reflects how quickly international pressure feeds into domestic markets.

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  • Meanwhile, silver drops — and capital rotates

While coffee is climbing, silver is going through the opposite cycle.

Prices fell more than 14% last week, extending a steady run of losses. The main driver here isn’t supply — it’s macroeconomics.

With inflation in the U.S. still stubborn, interest rates remain elevated. That pushes bond yields higher and makes non-yielding assets like silver less attractive. Money simply moves elsewhere.

You can also see it in ETF flows. Holdings dropped by 225 tons in a single week — a clear sign that institutional investors are reducing exposure.

What’s interesting, though, is that the physical market is telling a different story. China imported over 790 tons of silver in the first two months of the year, with February hitting a record. At the same time, exchange inventories in both Shanghai and COMEX are shrinking fast.

So, while paper markets are selling, physical demand hasn’t gone away.

  • The bigger picture

What we’re seeing now is a classic divergence.

Coffee is being driven by real-world constraints — supply, logistics, and producer behavior.
Silver is being driven by financial conditions — rates, yields, and capital flows.

For coffee, the key question isn’t whether prices can move — they already are. The real question is how long supply remains tight and whether producers step in at these levels.

Until that happens, the market stays vulnerable to further upside.

Coffee Prices Rise on Supply Concerns

Dubai – Qahwa World

Coffee futures rose on Monday, recovering from earlier losses as concerns over global supply disruptions supported the market.

May arabica gained 2.52 percent, rising 7.20 points, while May robusta edged up 0.46 percent, adding 16 points.

The rebound followed reports that the Strait of Hormuz has been closed, disrupting a key global shipping route. The development has pushed up freight rates, insurance costs, and fuel prices, increasing pressure on coffee importers and roasters worldwide.

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Earlier in the session, prices had moved lower as improved weather conditions in Brazil eased concerns about crop stress. Rainfall in Minas Gerais, the country’s main arabica-growing region, reached 57.7 millimeters last week, about 139 percent of the historical average.

Expectations of a large Brazilian harvest also continue to weigh on the market. StoneX recently raised its forecast for Brazil’s 2026 to 2027 coffee production to a record 75.3 million bags, up from 70.7 million.

Export data, however, provided some support. Figures from Cecafé showed Brazil’s green coffee exports fell 27 percent year on year in February to 2.3 million bags. Data from the country’s Trade Ministry also showed total coffee exports declined 17.4 percent to 142,000 metric tons.

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At the same time, rising inventories continue to weigh on prices. Arabica stocks monitored by Intercontinental Exchange climbed to 572,004 bags last week, the highest level in five and a half months. Robusta inventories also reached a three and a half month high earlier this month before easing slightly.

Coffee markets have been under pressure in recent weeks. In February, arabica fell to its lowest level in more than 15 months, while robusta dropped to a seven month low, largely due to expectations of a strong Brazilian crop.

Brazil’s crop agency Conab estimates 2026 production will rise 17.2 percent to 66.2 million bags. Arabica output is expected to increase 23.2 percent, while robusta production may grow 6.3 percent.

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Globally, Rabobank projects coffee production will reach a record 180 million bags in the 2026 to 2027 season, up by around 8 million bags from the previous year.

Strong supply from Vietnam has also added pressure to the market. Coffee exports from the country rose 14 percent in the first two months of 2026 to 366,000 metric tons, while full-year 2025 exports increased 17.5 percent. Production is expected to rise 6 percent to 1.76 million metric tons.

According to the International Coffee Organization, global coffee exports for the current season edged down 0.3 percent to 138.66 million bags. Meanwhile, the USDA Foreign Agricultural Service forecasts global production will increase 2 percent to a record 178.85 million bags, even as ending stocks are expected to decline by 5.4 percent to 20.15 million bags.

Costa Rican Coffee Farmers Hit by Strong Colón and Falling Prices

Dubai – Qahwa World

Coffee growers across Costa Rica are facing mounting financial pressure as two powerful forces converge: a sharply stronger national currency and declining global coffee prices. Industry leaders warn that the combination could significantly reduce farm income in the coming harvest and deepen the economic strain on rural coffee communities.

For a sector long recognized for producing high-quality Arabica coffee, the current environment highlights how global market shifts and domestic economic trends can quickly reshape the outlook for producers.

  • Currency Strength Erodes Export Earnings

Coffee in Costa Rica is sold on international markets in United States dollar, while most production costs—such as wages, fertilizers, transportation, and farm maintenance—are paid in Costa Rican colón.

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As the colón strengthens, every dollar earned from coffee exports converts into fewer colones. This reduces the real income farmers receive even when the global coffee price remains stable.

Exchange-rate data released by the Banco Central de Costa Rica show the dollar trading near ₡470 in mid-March 2026, significantly stronger for the local currency compared with rates above ₡680 only a few years earlier.

For export sectors such as coffee, the shift has created a challenging environment. While a strong currency can help reduce the cost of imported goods for consumers, it often compresses margins for industries that rely on international sales.

  • Factors Behind the Strong Colón

Economists attribute the strength of the Costa Rican currency to several economic trends that have increased the supply of foreign currency in the country.

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Strong tourism revenues, expanding exports from companies operating in special economic zones, and steady foreign investment have all contributed to increased inflows of dollars into the national economy. Lower energy import costs have also reduced the demand for foreign currency.

In response to these pressures, the Banco Central de Costa Rica has purchased large amounts of dollars in foreign-exchange markets in an effort to moderate fluctuations and build international reserves. Despite these efforts, the colón has remained relatively strong compared with historical averages.

  • Global Coffee Prices Move Lower

At the same time that currency movements are reducing local earnings, international coffee prices have begun to retreat from the highs seen in recent years.

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Prices for Arabica coffee traded on the Intercontinental Exchange in New York surged during 2025 amid global supply concerns. However, market sentiment has shifted as forecasts point to increased production in several major coffee-growing countries.

A major factor influencing the outlook is the expected harvest in Brazil, the world’s largest coffee producer. Production forecasts indicate the possibility of a larger crop in the 2026–2027 season, which could add significant supply to global markets and place additional downward pressure on prices.

For Costa Rican producers, the combination of falling prices and currency shifts means revenues could decline even further in the coming harvest cycle.

  • Rural Communities at Stake

Coffee remains a central pillar of rural economic life in Costa Rica. The industry provides employment for tens of thousands of workers throughout the year, along with additional seasonal jobs during harvest.

Production is concentrated in well-known coffee-growing regions such as Tarrazú, Pérez Zeledón, and Coto Brus, where generations of families have cultivated coffee as their primary source of income.

Small farms dominate the sector. A large majority of producers operate relatively small holdings, and many rely on modest harvest volumes each year. These producers are often the most vulnerable to price volatility and economic shocks.

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Over the past decade, the number of registered coffee growers in the country has declined as some farmers left the sector due to rising costs and uncertain profitability.

  • Growing Concern Among Industry Leaders

The Costa Rican Coffee Institute has described the current situation as a serious challenge for the industry and has called for continued dialogue with policymakers about possible support measures.

Proposals being discussed include improved credit access for farmers, targeted programs to support rural communities, and long-term initiatives focused on innovation, sustainability, and productivity.

Industry representatives emphasize that strengthening the resilience of coffee farms will be essential if Costa Rica is to maintain its reputation as a producer of high-quality coffee in a rapidly changing global market.

  • A Defining Moment for Costa Rica’s Coffee Sector

Costa Rica’s coffee industry has long been regarded as a symbol of national agricultural identity and quality. Yet the sector now finds itself navigating a complex mix of economic pressures beyond farmers’ control.

If global prices continue to soften while the national currency remains strong, growers may face increasingly difficult decisions about the future of their farms.

For thousands of coffee-growing families, the coming seasons could determine whether coffee cultivation remains a sustainable livelihood—or whether the country’s historic coffee landscape begins to change in fundamental ways.

Coffee Prices Rise as Iran Conflict Disrupts Global Shipping

Dubai – Qahwa World

Coffee prices climbed on Thursday as escalating tensions in the Middle East raised concerns about global supply chains and shipping routes.

May arabica coffee futures increased by 6.75 points (2.35%), while May robusta contracts gained 82 points (2.31%), reflecting market reactions to geopolitical developments affecting maritime trade.

The rise follows reports that the Strait of Hormuz, a critical global shipping corridor, could face disruption due to the ongoing conflict involving Iran. Statements from Iranian leadership suggested the strategic waterway could be used as leverage, while defense officials in the United Kingdom indicated evidence that mines may be placed in the strait.

The potential closure of the route has pushed up global shipping rates, insurance costs, and fuel expenses, increasing operational costs for coffee importers, traders, and roasters worldwide.

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However, gains in coffee prices remain limited due to favorable weather conditions in Brazil. Forecasts indicate rainfall in major coffee-growing regions, which could support crop development and ease supply concerns.

Adding further pressure on prices, commodity analytics firm StoneX raised its forecast for Brazil’s 2026/27 coffee production to a record 75.3 million bags, compared with its previous estimate of 70.7 million bags.

Meteorological data from Somar Meteorologia also showed that Brazil’s largest arabica-producing region, Minas Gerais, received 14.9 mm of rainfall last week, equivalent to about 35% of the historical average.

Meanwhile, Brazilian export data offered some support to the market. According to Cecafe, Brazil’s green coffee exports fell 27% year-on-year in February, while the country’s Trade Ministry reported a 17.4% annual decline, bringing total shipments to 142,000 metric tons.

Inventory movements are also shaping market sentiment. Stocks of arabica monitored by the Intercontinental Exchange (ICE) recently reached a five-month high of 564,626 bags before easing slightly to 552,192 bags. Robusta inventories also rose to a 3.5-month high earlier this month before declining modestly.

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Earlier in February, coffee prices dropped sharply amid expectations of a strong Brazilian crop. Brazil’s agricultural supply agency Conab projected the country’s 2026 coffee production at 66.2 million bags, including 44.1 million bags of arabica and 22.1 million bags of robusta.

On a global scale, Rabobank estimates coffee production could reach 180 million bags in the 2026/27 season, an increase of roughly 8 million bags compared with the previous year.

Vietnam, the world’s largest robusta producer, continues to influence market dynamics. Government statistics show Vietnam’s coffee exports rose 14% year-on-year in January–February 2026 to 366,000 metric tons, while exports in 2025 climbed 17.5% to 1.58 million metric tons. Production in the 2025/26 season is projected to reach 1.76 million metric tons, the highest level in four years.

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Despite these supply signals, the International Coffee Organization (ICO) reported that global coffee exports for the current marketing year have declined 0.3% year-on-year to 138.658 million bags.

Looking ahead, the USDA’s Foreign Agricultural Service forecasts global coffee production in 2025/26 at 178.848 million bags, with arabica output expected to decline 4.7% and robusta production projected to increase 10.9%. Ending global stocks are expected to fall 5.4% to 20.148 million bags.

Market analysts say the coffee sector remains caught between geopolitical risks affecting trade routes and expectations of strong global production, creating a volatile outlook for prices in the months ahead.

Coffee Farmers in Central America Struggle to Survive Falling Prices

Dubai – Qahwa World

The Guardian published a lengthy report titled “‘Everyone feels like they are being scammed’: can Central America’s small coffee growers survive as global prices fall?”, which discussed the growing pressures facing coffee farmers in parts of Central America, particularly in El Salvador and Honduras. The report explores how climate instability, rising production costs, labour shortages and volatile global markets are reshaping coffee farming across the region.

According to the report, many small producers who have depended on coffee cultivation for generations are now confronting increasingly unpredictable conditions. Weather patterns that once followed a familiar seasonal rhythm have become less reliable, making it difficult for farmers to plan their harvest cycles and manage their farms effectively.

The report begins on a hillside in western El Salvador, where coffee farmer Oscar Leiva observes rainfall arriving in December, a month that traditionally marked the beginning of the dry season. During the latest harvest cycle, flowering occurred early and then stalled, followed by a period of intense heat. As a result, the remaining crop is uneven in quality and more expensive to produce than previous harvests.

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For Leiva’s family, coffee is not simply a crop but a long-standing way of life. His mother, Esperanza Marinero, remembers when the rainy season arrived on time and harvests could be planned months ahead. Today, that certainty has disappeared. Farmers must make decisions about pruning, fertilising and hiring workers without reliable seasonal patterns, increasing the financial risks they face.

Coffee has historically played a major role in El Salvador’s economy. In the mid-1970s the country ranked among the world’s leading coffee producers, with harvests exceeding five million quintales, a unit equal to about 46 kilograms. Today, national production struggles to reach one million quintales.

The report notes that this decline reflects more than market cycles. Decades of land restructuring, climate shocks and rural migration have weakened the coffee sector and altered the agricultural landscape. Increasing climate volatility has disrupted flowering cycles, reduced yields and affected the quality of coffee, particularly for small farmers who lack financial reserves to absorb repeated losses.

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Cecibel Romero, a researcher focusing on coffee production, explained that the sector is experiencing overlapping challenges that extend beyond climate change alone. Rising temperatures, irregular rainfall and plant diseases such as coffee rust have exposed long-standing vulnerabilities in traditional production systems.

Romero noted that past production models often focused on maximising yields and implementing short-term solutions rather than building long-term resilience. After severe rust outbreaks in the early 2010s, many producers replanted their farms with varieties believed to be resistant. However, some of these varieties produced lower-quality beans or did not maintain their resistance over time.

As coffee’s economic importance declined in El Salvador, public support systems for the sector were also reduced. Agricultural services weakened, renovation programmes became fragmented and access to affordable credit narrowed. As a result, many producers have been left to cope with climate risks, disease outbreaks and market volatility largely on their own.

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Similar pressures are being felt in Honduras, the largest coffee producer in Central America. Although overall production remains higher than in El Salvador, farmers there are also dealing with rising costs and climate-related challenges.

Juan Luis Hernández, a forest engineer who has worked on environmental projects connected to the Honduran Coffee Institute, said adapting to changing conditions requires investment, time and labour. Measures such as managing shade trees, restoring soil health, protecting water sources and monitoring plant diseases all require resources that are not equally available to all farmers.

In the Honduran region of Copán, farmer Gerardo Vásquez manages an eight-hectare family farm while also advising other growers. Trained through the Honduran Coffee Institute, he works on soil analysis, selecting coffee varieties and developing agroforestry systems.

Even with this technical background, Vásquez says the economic reality of coffee farming remains difficult. Establishing one manzana of coffee — roughly 0.7 hectares — now costs about 200,000 lempiras over a period of three years.

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Production costs have risen significantly in recent years. Fertiliser prices increased sharply after the pandemic, while labour shortages have pushed wages for harvest workers higher. When harvesting, processing and transport are included, farmers may spend more than 3,000 lempiras to produce a single quintal of parchment coffee.

Weather conditions can further complicate the process. Continuous rainfall makes drying coffee difficult, forcing some farmers to sell freshly picked cherries directly from the field at lower prices. Others depend on intermediaries who provide advance payments, which can limit farmers’ ability to negotiate prices later.

Climate change is also affecting where coffee can be grown successfully. Farms located below 1,000 metres above sea level are becoming more vulnerable to heat stress, pests and diseases. As a result, coffee cultivation has gradually moved to higher elevations over time.

However, relocating production to higher ground is not feasible for many smallholders, who may not have access to suitable land or the financial means to make such changes.

At Café San Rafael in Honduras, co-owner Carlos Guerra explained that the flowering cycle of coffee plants has become increasingly irregular. What once occurred within a predictable timeframe now happens in stages, extending the harvest period and raising labour costs.

Labour itself has become one of the most pressing challenges for producers. Coffee harvesting requires careful selection of ripe cherries, a process that cannot easily be mechanised. Younger workers are increasingly leaving rural areas, making it harder for farms to recruit enough labour during harvest season.

Farmers are experimenting with various adaptation strategies, including planting additional shade trees and improving soil management practices. While these measures can help protect coffee plants from heat stress, they may also reduce yields, creating a difficult balance between environmental resilience and economic viability.

Some farms attempt to offset these challenges by focusing on higher-value markets. At Café San Rafael, careful management of fermentation and drying processes helps maintain coffee quality even when harvest conditions are uneven. Operating a roastery also allows the business to manage fluctuations in supply.

However, many small farmers do not have access to such opportunities. Entering specialty coffee markets often requires certification, processing infrastructure and export connections that remain beyond the reach of numerous producers.

Emeric Seguin, director of sourcing and sustainability at a specialty coffee company working with producers in Central America, told the newspaper that mistrust is widespread within the supply chain. Farmers often feel undervalued, while buyers worry about inconsistent supply, leaving cooperatives caught between both sides.

Several initiatives are attempting to promote more resilient farming practices. In El Salvador, a coffee production school known as Renacer encourages ecological approaches that focus on soil health, shade restoration and long-term stability rather than maximising short-term yields.

Agronomist Sigfredo Corado explained that the goal is to reduce extreme fluctuations in harvests. While farms may not achieve exceptionally high yields in strong years, they are also less likely to experience severe drops in production.

Despite these efforts, the report notes that global market conditions could add further pressure. Rabobank has predicted that increasing coffee surpluses in the coming seasons could push international prices lower, potentially making coffee production less viable for smallholders.

As profitability declines, some land previously used for shaded coffee is being converted to other crops or sold for development, gradually altering landscapes that have long been associated with coffee cultivation.

For farmers such as Oscar Leiva, planning for the next season remains unavoidable despite the uncertainty. Each harvest now requires decisions to be made without the reliable patterns that once guided coffee farming.

Across Central America, producers continue searching for ways to adapt to changing environmental and economic realities, while the long-term sustainability of smallholder coffee farming remains an open question.

Coffee Markets Rise Amid Middle East Shipping Disruptions

Dubai – Qahwa World

Global coffee markets moved higher last week as escalating tensions in the Middle East disrupted key shipping routes and increased freight costs, while supply developments in major producing countries also influenced market sentiment.

Arabica coffee futures began the week at 279.90 US cents per pound and briefly approached the 290-cent level before easing slightly. The market maintained upward momentum through the week, posting marginally higher closes on Wednesday and Thursday. By Friday, prices opened 5.45 cents per pound higher than the previous day’s close, supported in part by reports that Brazil’s coffee exports fell 17.4% year-on-year in February.

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  • Shipping routes under pressure

Market activity during the period from March 2 to March 5 was shaped largely by geopolitical developments rather than major supply news from coffee-producing regions.

Military strikes involving the United States and Israel against Iran, followed by retaliatory actions, disrupted shipping activity through the Strait of Hormuz, a critical route for global trade. At the same time, shipping companies remain cautious about passing through the Red Sea amid concerns over possible attacks by Yemeni Houthi rebels.

These risks have forced some vessels to take longer routes around the Cape of Good Hope, significantly increasing transportation times as well as freight and insurance costs. The situation has added new uncertainty to global supply chains, including agricultural commodities such as coffee.

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  • Weather challenges in Colombia

At origin, coffee production conditions in Colombia remain difficult due to excessive rainfall. Persistent wet weather has affected flowering, maturation, and bean development in several regions, particularly in southern areas where limited sunshine has compounded the problem.

Producers and exporters are also facing economic pressure. The stronger Colombian peso, combined with the recent decline in the C-market price, is expected to reduce revenues compared with the previous year.

As a result, exporters have slowed sales, leading to lower export volumes and rising inventories while waiting for more favorable market conditions when possible.

  • Honduras harvest nearing completion

In Honduras, the harvest season has moved well beyond its peak, with more than 75% of the crop already collected. Harvesting has largely finished in lower-altitude regions, leaving mainly higher-elevation farms still gathering the remaining coffee.

Purchasing activity remains mixed. Exporters who secured contracts earlier at higher market prices are continuing to buy coffee cherries and parchment, while others with fewer forward commitments are delaying purchases.

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  • Currency markets react

Currency markets were also influenced by developments in the Middle East, with the US dollar strengthening following the weekend’s military strikes.

The GBP/USD and EUR/USD currency pairs initially dropped to 1.327 and 1.155, respectively, before recovering slightly to around 1.332 and 1.160 by Tuesday afternoon.

For the remainder of the week, both pairs traded mostly within a lower range compared with previous weeks as investors monitored geopolitical developments and their potential impact on global trade and energy markets.

  • Market outlook

While major supply-side news from coffee-producing countries remained limited during the week, traders continue to monitor shipping disruptions, weather conditions at origin, export flows, and currency movements. These factors are expected to remain key drivers of short-term price movements in global coffee markets.

Shock in the Coffee Market: Colombia’s Production Drops 36%

Dubai – Qahwa World

Coffee production in Colombia, the world’s largest producer of washed Arabica coffee, recorded a sharp drop in February 2026. Production reached 869,000 bags, with each bag weighing 60 kilograms, marking a decline of 36% compared with the same month last year. This decrease reflects a continuing negative trend that is putting pressure on the global coffee supply.

  • Noticeable Drop in Annual Production

When looking at the total production over the last 12 months, from March 2025 to February 2026, the total reached 12.72 million bags. This represents a decline of 14% compared with the previous cycle.

German Bahamon Jaramillo, the general manager of the National Coffee Federation (FNC), said that the current situation requires urgent action to protect the stability of the sector and maintain farm productivity, according to the Argentine newspaper Infobae.

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The main recommendations include improving fertilization to restore plant strength and renewing coffee farms to ensure sustainable production in the medium term. There are also calls for direct support measures for farmers to help them deal with lower profits caused by reduced production.

  • Exports Also Decline

The drop in production has also affected exports. Coffee exports in February fell by 32%, reaching 807,000 bags.

During the beginning of the agricultural season, from October to February, total exports reached 5.06 million bags. This is a decline of 14% compared with the same period in the previous cycle.

  • Production Under Pressure

Experts say this decline shows how vulnerable coffee production is to climate changes and farm management problems. It also puts pressure on global prices and may increase the cost of coffee for consumers. At the same time, it makes it more difficult for small farmers to maintain sustainable businesses.

  • Main Reasons for the Decline

Several factors are behind the drop in production.

Climate changes:
Continuous heavy rain and thick cloud cover affected flowering and plant growth. This also led to the spread of diseases such as coffee leaf rust, although detection rates remain low thanks to resistant coffee varieties.

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Farm management challenges:
Coffee plants are showing signs of exhaustion after several years of strong production. The 2024/2025 season recorded the highest production level in 30 years. In addition, higher costs for inputs such as fertilizers and labor have increased pressure on farmers.

Weak start to 2026:
The decline follows a 34% drop in January 2026, when production reached 893,000 bags, making the start of the year one of the weakest in recent years.

  • Suggested Actions

Experts suggest several steps to address the situation.

Short term:
Improve fertilization to strengthen plants and provide direct financial support for small farmers, who produce about 70% of the country’s coffee, to help offset income losses.

Medium term:
Renew coffee farms to ensure long-term sustainability and adopt varieties that are more resistant to climate conditions. Price-stabilization mechanisms are also recommended to reduce market volatility.

Long term:
Address climate change through global strategies. A report from the International Coffee Organization (ICO) and other groups expects that global coffee production could be affected by up to 50% by 2050 if adaptation measures are not taken.

  • Impact on Global Supply

Colombia represents about 10% to 12% of global Arabica production. Because of this, any decline in its output puts pressure on the global supply, especially when production also drops in countries like Vietnam or Indonesia during some periods.

However, some of this pressure may be eased by expectations of a record Brazilian crop in the 2026/2027 season, estimated at 66.2 million bags, an increase of 17.2%. This could push global production to around 180 million bags.

Still, climate volatility keeps supply fragile. As a result, major international buyers, including the United States and Europe, may look for temporary alternatives.

  • Price Movements

Arabica prices recently fell from record levels above $4 per pound in November 2025 to about $2.80 to $3.00 per pound today, mainly because of strong crop expectations in Brazil.

However, the decline in Colombian production has helped push prices up by about 2% to 5% in recent weeks. This increase is linked to concerns about global supply and geopolitical tensions, including shipping disruptions in the Strait of Hormuz.

The World Bank expects Arabica prices to fall by 13% to 15% during 2026 overall. But this outlook could change if production in Colombia continues to decline.

For consumers, coffee prices in the market may rise by about 5% to 10% in the short term, especially in Europe and the United States.

Caffè Nero Forecasts Rising Prices Amid Steady Global Growth

Dubai – Qahwa World

Caffè Nero is pressing ahead with its international expansion, even as it warns that the price of a cup of coffee is likely to keep climbing. The premium coffee house group cited a volatile mix of geopolitical conflict, rising labor costs, and climate-driven supply shortages as the primary drivers behind the anticipated hikes.

The family-owned business, which operates 1,151 outlets globally, is targeting significant growth this year. The group plans to open 30 new stores in the UK and up to 70 additional locations across its 10 international markets. This expansion follows the recent acquisition of Washington D.C.-based Compass Coffee, a move that integrated 15 new sites and a dedicated roasting facility into the brand’s North American infrastructure.

  • A Different Rhythm

Gerry Ford, who founded the chain in 1997, suggests that Caffè Nero’s private ownership has allowed it to weather the current economic storm better than its publicly traded rivals. While competitors like Starbucks and Costa have struggled with store closures or stalled sales plans, Ford attributes Nero’s resilience to a “steady pace” and longer-term planning.

“We don’t want to take over the world,” Ford noted. “We have more flexibility because we aren’t trying to hit a quarterly reporting target. We move to our own rhythm.”

  • Financial Headwinds

Despite a 13% jump in annual sales to £587.6 million, the group’s pre-tax losses widened to £41 million. This was largely due to the rising cost of servicing its £481 million debt, fueled by recent interest rate hikes and a string of strategic acquisitions, including 200 Degrees and Harris + Hoole.

Caffè Nero Forecasts Rising Prices Amid Steady Global Growth

To manage these costs, Ford confirmed that the group will pause further acquisitions for at least a year to focus on integrating its latest purchases and meeting upcoming debt repayments.

  • The Cost Crisis

The industry is currently facing a “perfect storm.” Coffee prices tripled between 2023 and early 2025 as the climate crisis ravaged crops in Brazil and Colombia. While wholesale prices have recently stabilized, they remain nearly double what they were three years ago.

Ford warned that consumers shouldn’t expect relief at the till anytime soon. The ongoing conflict in the Middle East continues to drive up energy and shipping costs, while rising business rates and wages in the UK add further pressure. Data shows that the average price of a latte has already surged by 35% over the past five years, now sitting at approximately £3.76.

Despite these challenges, Ford remains bullish on the future of the specialty coffee sector, insisting that there is still plenty of “white space” for independent, premium brands to thrive globally.

Kim Thompson: Coffee on the Edge of Disruption

Dubai – Ali Alzakary

The global coffee industry has spent the past few years navigating one disruption after another—from pandemic shutdowns and climate volatility in producing countries to freight crises that reshaped global shipping routes. As the global coffee market grapples with volatility—production reaching around 175 million bags in 2025 while costs continue to rise due to climate pressures and freight disruptions—the ongoing conflict in the Middle East is adding a new layer of uncertainty to an already fragile supply chain.

Coffee moves through one of the most complex trade networks in the food and beverage sector. Green beans travel from farms across Latin America, Africa and Asia through international ports and maritime corridors before reaching roasters, cafés and consumers. Any disruption to shipping routes, insurance costs or regional logistics can quickly ripple across the industry. For specialty coffee—where freshness, tight margins and long-term sourcing relationships define the business—the impact can be felt even faster.

To understand how the sector is reacting, we spoke with Kim Thompson, Co-Founder  at RAW Coffee Company in Dubai. From monitoring shipments already at sea to preparing technical support systems for cafés, Thompson explains how roasters are navigating rising costs, uncertain logistics and a rapidly shifting geopolitical landscape.

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In this conversation, she offers a clear view of what café operators are worrying about right now, how long menu prices can realistically hold, and why the coffee industry’s resilience often comes down to relationships built across the supply chain.

  • Has the “fear factor” kicked in yet? Are you seeing cafés or hotels panic-buying and stockpiling coffee to guard against a potential shortage?

Not really. The reality of the café industry is that most operators are managing week-to-week cash flow, not building strategic stockpiles. Right now the conversations we’re having are far more about cost control than hoarding inventory.

The other factor is freshness. Speciality coffee isn’t a commodity that sits in a warehouse for months. We roast weekly and deliver fresh, so stockpiling doesn’t really fit how quality coffee businesses operate.

Our expectation is that the real response, if there is one, will likely come after Eid al-Fitr, once operators have had time to assess the geopolitical situation and think through their own coping strategies. At the moment, people are watching closely rather than panicking.

  • The coffee you’re roasting today was bought at pre-war prices — how long can you hold your current menu prices before new logistics costs force your hand?

The uncomfortable truth is that price pressure in coffee started well before this conflict. The industry has already been absorbing significant increases at origin, higher processing costs, and rising freight prices for the past two years.

We have already had to adjust pricing once, simply because the economics of producing high-quality coffee have changed globally.

If shipping routes tighten or logistics costs spike again because of regional instability, there’s only so much the supply chain can absorb. Roasters can cushion the impact for a period of time, but eventually the math catches up with everyone.

Coffee has historically been underpriced for the amount of work and risk involved in producing it. What we are seeing now is the global market slowly correcting that reality.

  • Are there specific “origins” or specialty grades that are now effectively “cut off” due to their transit routes through the conflict zone?

At the moment nothing is completely cut off, but logistics has become far more complicated overnight.

We currently have multiple containers on the water and are actively tracking them while exploring alternative routing options that avoid the Strait of Hormuz.

In many ways it feels like a return to the early COVID-19 playbook—scenario planning, contingency routing, and leaning heavily on relationships across the supply chain to keep things moving.

The specialty coffee industry is surprisingly resilient because it’s built on long-term relationships with producers, exporters and logistics partners. When things get unpredictable, those relationships become incredibly valuable.

  • What’s the plan for equipment and spare parts? Is there a risk that a broken espresso machine could stay down because of shipping delays?

Equipment supply is definitely something we’re watching closely, but fortunately we forecasted and planned ahead. We have several containers on the water carrying both commercial and domestic machines, so supply may get tight but we’re not walking into this empty-handed.

More importantly, we have invested heavily in our technical infrastructure. We run a full in-house service department with extensive spare parts inventory, qualified technicians, and swap-out machines available for our commercial partners.

In practical terms, if a café’s machine goes down, we’re structured to keep them operating. The bigger challenge in this industry is rarely the machine itself—it’s the global logistics that sit behind everything.