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.

Read Also: Coffee Prices Drop on Brazil Weather and Rising Stocks

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.

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

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.

Read also: Kim Thompson: Coffee on the Edge of Disruption

  • 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.

Read Also: Historic Colombian Coffee Harvests Face Labour Shortages

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.

Oil Surge Could Brew Higher Coffee Prices

Dubai – Qahwa World

Rising oil prices linked to escalating tensions in the Middle East are raising fresh concerns across the coffee sector, with vendors warning that higher fuel costs could eventually translate into more expensive coffee for businesses and consumers.

Crude oil climbed above 90 dollars per barrel on Friday, a level that industry participants say may increase the cost of transporting coffee beans across global supply chains. Because coffee is largely traded internationally and shipped over long distances, higher energy prices can quickly affect freight and logistics costs.

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The concern comes only months after the United States removed most tariffs on coffee and several agricultural products last November, a move that had provided temporary relief to importers, roasters and coffee retailers.

  • Shipping Costs Back in Focus

Coffee businesses say transportation costs remain one of the most sensitive factors affecting the price of beans. Any sustained increase in oil prices could raise the cost of shipping green coffee from producing countries to roasting and consuming markets.

Industry observers note that global coffee prices have already been under pressure due to supply challenges in recent years.

According to the World Bank, coffee prices have remained relatively high after adverse weather conditions in several coffee-producing regions reduced harvests and tightened global supply. Earlier expectations suggested that prices might gradually ease this year as production recovered.

However, the recent geopolitical tensions and the accompanying surge in oil prices could introduce new cost pressures, particularly through higher freight rates and supply chain expenses.

  • Uncertain Outlook for Coffee Markets

For coffee retailers and roasters, the coming months may depend largely on how energy markets evolve. Higher fuel costs can affect nearly every stage of the coffee supply chain, from farm transportation and export logistics to international shipping.

While the full impact remains uncertain, market participants say sustained increases in oil prices could add another layer of volatility to an already sensitive global coffee market.

 

Vietnam’s Coffee Crisis Could Disrupt Global Supply Chains

Dubai – Qahwa World

A report published by BeverageDaily warns that challenges facing coffee production in Vietnam could trigger new volatility in global coffee markets, potentially affecting supply chains and prices in the coming years.

Although global coffee prices have recently shown signs of easing, the difficulties confronting Vietnamese coffee farmers may reverse that trend if production declines continue.

  • Vietnam’s Key Role in the Global Coffee Market

Vietnam is the world’s second-largest coffee producer after Brazil and the leading global producer of Robusta coffee. This variety accounts for more than forty percent of global production and plays a central role in commercial coffee blends widely used by major manufacturers such as Nestlé.

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According to figures cited in the report, Vietnam exports more than 1.5 million metric tons of coffee annually. In 2025, the country’s coffee exports reached approximately 8.92 billion dollars, representing a 58.8 percent increase compared with 2024, largely driven by high Robusta prices.

  • Climate Pressures and Rising Land Costs

Coffee production in Vietnam’s Central Highlands has been increasingly affected by extreme weather conditions. Severe floods and prolonged rainfall last year reduced yields and created concerns among traders, given Vietnam’s central role in global Robusta supply.

At the same time, rising land prices in coffee-growing regions are adding further pressure. Infrastructure development and expanding investment in agriculture have pushed land values higher, encouraging some farmers to sell their farms rather than continue production under tightening profit margins.

Industry observers say coffee farmers today must simultaneously manage climate risks, financial pressures and rising production costs, making the sustainability of farming operations more difficult.

  • Tax Policy Changes

The report also highlights regulatory challenges faced by the Vietnamese coffee sector during 2025 after the introduction of a five-percent value-added tax on certain semi-processed agricultural products, including coffee beans.

Exporters argued that the measure complicated trade procedures and tied up cash flow because exported green coffee is typically zero-rated. Vietnamese authorities later amended the legislation, and the previous tax treatment was restored starting in early 2026.

  • Smaller Roasters May Feel the Impact First

According to the report, disruptions in Vietnam’s coffee sector may initially affect smaller and medium-sized roasters, particularly in Europe, Asia and Australia, which rely heavily on stable supplies of affordable green coffee.

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Large multinational companies generally have greater flexibility through diversified sourcing and long-term contracts. Nevertheless, price increases may eventually reach consumers, often with a delay ranging from twelve to twenty-four months.

  • A Possible Shift Toward Higher Value Production

With climate and land constraints limiting expansion in production volume, Vietnam’s coffee industry may increasingly focus on quality improvement and value-added activities.

Some producers may expand into roasting and semi-processed coffee products rather than exporting raw beans alone, a development that could diversify global supply chains over time.

Read also: Brazil Rain and Vietnam Surplus Sink Coffee Futures

The report also notes growing international interest in high-quality Robusta coffees, sometimes referred to as fine Robusta, as climate pressures make Arabica production more vulnerable in certain regions.

  • Investments to Strengthen the Supply Chain

Major coffee companies, including Nestlé, continue to invest in Vietnam’s coffee sector in an effort to strengthen supply chains and promote sustainable farming practices.

Programs supporting drought-resistant coffee seedlings, farm renovation and regenerative agriculture aim to improve productivity and resilience among thousands of farmers in Vietnam’s Central Highlands.

Despite these initiatives, the report suggests that the global coffee industry may still face recurring supply pressures if climate challenges and production costs continue to rise in key producing countries.

Coffee Prices Rise on Supply Concerns

Dubai – Qahwa World

Global coffee prices moved higher on Thursday as renewed concerns about supply disruptions supported the market. Arabica futures climbed to their highest level in about two weeks, while robusta contracts also posted modest gains.

Market sentiment was influenced by fresh export data from Brazil. The country’s Ministry of Trade reported that Brazilian coffee exports in February declined by 17.4 percent compared with the same month a year earlier, totaling about 142,000 metric tons. The drop raised questions about near-term supply availability from the world’s largest coffee producer.

Shipping conditions in global trade routes also contributed to the cautious mood in the market. Disruptions affecting shipping lanes through the Strait of Hormuz have increased transportation costs, including higher freight rates, insurance premiums and fuel expenses. These factors are expected to add pressure to import costs for coffee traders and roasters.

Despite the upward move in prices, a stronger U.S. dollar limited the extent of the gains. A firmer dollar generally makes dollar-denominated commodities such as coffee more expensive for buyers using other currencies.

Weather developments in Brazil continue to play an important role in shaping market expectations. Recent rainfall has improved soil moisture conditions in Minas Gerais, the country’s main arabica-producing region. According to meteorological data, the area received significantly above-average precipitation during the week ending February 20, helping improve crop prospects.

Coffee prices have experienced notable volatility in recent weeks. Earlier in the month, both arabica and robusta futures fell sharply amid expectations of a large Brazilian harvest. Brazil’s national crop supply agency projected that the country’s coffee output in 2026 could reach a record 66.2 million bags, driven by stronger arabica production and a moderate increase in robusta volumes.

Global supply forecasts have also pointed to expanding production. Banking sector estimates suggest worldwide coffee output may reach around 180 million bags in the 2026/27 season, an increase of roughly eight million bags compared with the previous year.

Meanwhile, Vietnam continues to expand its presence in the robusta market. Official data show the country recorded strong export growth at the start of the year, with shipments rising sharply compared with the same period last year. Vietnam remains the world’s largest producer of robusta coffee, and its production is expected to grow further in the current crop cycle.

Coffee inventories monitored by the Intercontinental Exchange have also shown signs of recovery after reaching multi-month lows late last year. Higher stock levels can weigh on prices because they signal improved supply availability in the market.

At the same time, production trends in other origins remain mixed. Colombia, the world’s second-largest arabica producer, recently reported a significant decline in January coffee output compared with the previous year, a factor that provided some support to global prices.

Overall, the coffee market continues to balance opposing forces: concerns over logistics and regional production setbacks on one side, and expectations of larger global harvests on the other. Traders are closely watching weather conditions, export flows and shipping developments for further direction in the weeks ahead.

Brazil Crop Expectations Pressure Global Coffee Prices

Dubai – Qahwa World

Coffee futures closed lower at the end of the week as expectations of stronger global production continued to weigh on sentiment. The market reaction reflects growing confidence that supply conditions may improve in the upcoming seasons, particularly with Brazil at the center of the outlook.

A recent projection from Rabobank indicates that global coffee production could reach 180 million bags in the 2026/27 season, potentially marking a record and representing an increase of around 8 million bags compared with the previous year. The forecast has reinforced a broader shift in market expectations after months dominated by tight supply concerns.

In Brazil, fresh estimates from Conab point to a significant rebound in output for 2026. The agency projects total production at 66.2 million bags, up 17.2% year-on-year. Arabica output is expected to rise more sharply, increasing 23.2% to 44.1 million bags, while robusta production is forecast to grow 6.3% to 22.1 million bags.

Weather conditions have contributed to the improved outlook. Data from Somar Meteorologia show that Minas Gerais, Brazil’s largest arabica-producing region, received rainfall above the historical average during mid-February. Adequate moisture during key crop development stages has strengthened expectations for higher yields, adding pressure to prices that have already retreated from recent highs.

Vietnam has also played a role in easing supply concerns. As the world’s leading robusta producer, the country reported a sharp year-on-year increase in coffee exports in January, according to official statistics. Full-year 2025 exports also recorded solid growth. Production for the 2025/26 season is projected to reach approximately 1.76 million metric tons, or about 29.4 million bags, reflecting a four-year high. The expansion in Vietnamese output continues to influence the robusta segment in particular.

Exchange-monitored inventories have shown signs of recovery as well. Certified arabica stocks tracked by ICE have risen from their lows reached late last year, while robusta inventories have also moved higher after touching multi-month troughs. The increase in available certified stocks signals improved short-term supply availability.

At the same time, some supply-side developments have provided limited support. Brazil’s Trade Ministry reported a year-on-year decline in January coffee exports. In Colombia, the National Federation of Coffee Growers announced that January production fell sharply compared with the same month last year, tightening availability in the washed arabica segment.

On the global level, the International Coffee Organization has reported a slight decline in coffee exports for the current October–September marketing year. However, the broader outlook remains shaped by expectations of higher output. The USDA Foreign Agricultural Service projects world coffee production in 2025/26 at nearly 179 million bags, with robusta output increasing while arabica production is forecast to decline modestly. Ending stocks are expected to ease compared with the previous season.

Overall, improved crop prospects in Brazil, expanding robusta production in Vietnam, and recovering inventories are collectively reshaping the global coffee balance, placing downward pressure on prices as the market reassesses supply risks.

Global Coffee Production Is Rising; Prices Are Falling

An Industry Perspective from Ethiopia

By Gizat Worku Kebede, General Manager of the Ethiopian Coffee Exporters Association.

Global coffee production is increasing; its price, meanwhile, is decreasing.

According to the new global coffee production forecast released on February 25, 2026, the world is set to produce a volume it has never seen before. Rabobank forecasts production of 180 million 60-kg bags global consumption, signaling continued supply expansion and potential downward pressure on prices.

Additional analyses highlight speculative fund liquidation and surplus conditions as contributing factors to price volatility. HedgePoint Global Markets forecasts Brazil’s 2026/27 exports at 47 million bags — a historical high — reinforcing expectations of softer price conditions.

The average price of Brazilian Natural coffee in the New York market declined from USD 3.43 per pound in January to USD 3.09 in February. This movement reflects prevailing market dynamics and broader supply-demand conditions.

The World Bank projects an average 13% price adjustment in 2026 compared to 2025 levels.

For Ethiopian exporters and suppliers, alignment between domestic pricing and global market trends remains essential for competitiveness and sustainable market participation. Price structures that reflect international benchmarks help safeguard export flows and foreign currency earnings in a volatile market environment.

This perspective is offered as an industry contribution to informed discussion on global coffee market developments.

Coffee Prices Consolidate Amid Mixed Signals in Global Market

DUBAI – QAHWA WORLD

Coffee prices settled mixed on Wednesday, consolidating recent losses after a period of significant pressure. May Arabica coffee (KCK26) closed slightly lower at -0.65 (-0.23%), while May Robusta coffee (RMK26) rose +63 (+1.73%).

Arabica and robusta prices had tumbled earlier this month, with arabica reaching a 15-month low on Tuesday and robusta falling to a 6.5-month low on Monday, driven by expectations of a record Brazilian crop. Brazil’s crop forecasting agency, Conab, projected on February 5 that 2026 coffee production will rise +17.2% year-on-year to 66.2 million bags. Arabica production is expected to increase +23.2% to 44.1 million bags, while robusta will climb +6.3% to 22.1 million bags.

Wednesday’s losses were limited due to a stronger Brazilian real, which rose to a 1.75-year high against the U.S. dollar, discouraging export sales. Additionally, adequate rainfall in Brazil is supporting crop prospects. Somar Meteorologia reported that Minas Gerais, the country’s largest arabica-growing region, received 62.8 mm of rain during the week ending February 13, or 138% of the historical average.

Vietnam, the world’s largest robusta producer, is also influencing the market. January coffee exports surged 38.3% year-on-year to 198,000 metric tonnes, while total 2025 exports increased 17.5% to 1.58 million metric tonnes. Vietnam’s 2025/26 production is projected to rise 6% to a four-year high of 1.76 million metric tonnes (29.4 million bags).

ICE coffee inventories have shown signs of recovery, adding pressure to prices. Arabica stocks monitored by ICE rose to a 3.75-month high of 461,829 bags on January 7 after falling to a 1.75-year low in November. Similarly, ICE robusta inventories recovered to a 2.75-month high of 4,662 lots on January 26.

On the positive side, Brazil’s Trade Ministry reported that January exports fell -42.4% year-on-year to 141,000 metric tonnes, while lower supplies from Colombia, the world’s second-largest arabica producer, supported prices after January production dropped -34% to 893,000 bags.

Globally, the International Coffee Organization reported that total coffee exports for the current marketing year (October–September) declined slightly by -0.3% to 138.658 million bags. The USDA Foreign Agriculture Service projected in December that world coffee production in 2025/26 will reach a record 178.848 million bags, with arabica falling -4.7% to 95.515 million bags and robusta rising +10.9% to 83.333 million bags. Brazil’s production is expected to decline by 3.1% to 63 million bags, while Vietnam’s output will increase by 6.2% to 30.8 million bags. Ending stocks for 2025/26 are forecast to fall -5.4% to 20.148 million bags.

Overall, the coffee market faces mixed signals, with strong Brazilian supply forecasts and Vietnamese robusta exports exerting downward pressure, while lower production in Colombia and supply constraints in certain markets provide support for prices.