Tag: U.S. coffee tariffs

Coffee Prices Surpass $4 per Pound Amid Global Supply Strains and Trade Tensions

Posted on by Qahwa World

Dubai, September 16, 2025 (Qahwa World) – The global coffee market has once again taken center stage as New York arabica futures surged above $4 per pound for the first time since April. This sharp rally reflects a confluence of factors—from severe drought in Brazil and dwindling inventories to U.S. import tariffs and weaker global exports—raising new concerns about supply stability.

A Sharp Rally in Prices

On Monday, arabica futures jumped 3.6%, bringing total gains since early August to nearly 47%. In New York, arabica rose 3.1% to $4.0905 per pound, while robusta in London climbed 3.6%. The steep rise has fueled market anxiety, with momentum indicators signaling overbought conditions: the 14-day relative strength index crossed above 70, pointing to unusually rapid gains.

Brazil at the Epicenter

Brazil, the world’s top coffee producer, remains at the heart of the current price surge. According to meteorological firm Somar Meteorologia, the key producing states of Minas Gerais and São Paulo face abnormal heat and drought, while Espírito Santo is also expected to receive below-average rainfall. Such conditions threaten the upcoming flowering stage—a critical period for setting the next harvest due in mid-2026.

Brazil’s crop forecasting agency Conab lowered its 2025 arabica output estimate by 4.9% on September 4, cutting projections to 35.2 million bags from 37 million in May. Overall coffee production was revised to 55.2 million bags from 55.7 million previously.

Currency movements are amplifying the pressure: the Brazilian real rallied to a 15-month high against the U.S. dollar, discouraging export sales and lending further bullish support to global coffee prices.

U.S. Tariffs Tighten Supply

Trade tensions are another driving force. The U.S. imposed a 50% tariff on Brazilian coffee imports, prompting American buyers to cancel new contracts. This shift is tightening domestic supplies, particularly significant given that nearly one-third of U.S. unroasted coffee imports come from Brazil. Analysts warn this could amplify short-term volatility.

Shrinking Inventories

The decline in exchange-monitored stockpiles underscores the strain on global supply. ICE-monitored arabica inventories fell Monday to a 16-month low of 666,337 bags. Robusta inventories also slipped to a two-week low of 6,556 lots, hovering just above the seven-week low reached in late August.

Reduced reserves highlight how vulnerable the market is to further disruptions, with less buffer available to absorb shocks.

Export Slowdowns Worldwide

Export data confirms these tightening conditions. The International Coffee Organization (ICO) reported on September 3 that global exports fell 1.6% year-on-year in July to 11.6 million bags. Cumulative shipments from October through July declined 0.3% to 115.6 million bags.

Brazilian exports have been particularly weak. The Trade Ministry reported a 20.4% year-on-year drop in July shipments of unroasted coffee to 161,000 metric tons. Exporter group Cecafe said July green coffee exports fell 28% to 2.4 million bags, with arabica shipments down 21% and robusta plunging 49%. Overall, Brazil’s exports in July totaled 2.7 million bags, while January–July shipments fell 21% to 22.2 million bags.

Vietnam Adds to the Strain

Vietnam, the world’s second-largest producer, is also struggling. Production in the 2023/24 crop year fell 20% to 1.47 million metric tons, the smallest crop in four years, while exports for 2024 dropped 17.1% to 1.35 million tons. The Vietnam Coffee and Cocoa Association in March lowered its 2024/25 production estimate to 26.5 million bags from 28 million.

Yet more recent figures show some rebound: Vietnam’s National Statistics Office reported January–August 2025 exports up 7.8% year-on-year to 1.14 million tons, highlighting mixed signals from the world’s robusta powerhouse.

Mixed Forecasts and Outlook

The outlook remains divided. The USDA’s Foreign Agriculture Service (FAS) projects global coffee production in 2025/26 will rise 2.5% year-on-year to a record 178.7 million bags. Arabica production is forecast to fall 1.7% to 97 million bags, while robusta is expected to jump nearly 8% to 81.7 million bags. Ending stocks are seen climbing 4.9% to 22.8 million bags.

By contrast, commodity trader Volcafe projects a global arabica deficit of 8.5 million bags in 2025/26, widening from a 5.5 million bag shortfall this season. This would mark the fifth consecutive year of supply deficits for arabica, underscoring persistent structural imbalances.

Harvest Progress in Brazil

One counterweight to bullish factors is Brazil’s rapid harvest progress, which typically exerts downward pressure on prices. On September 5, cooperative Cooxupé reported that its members had harvested 97% of their crops. Separately, Safras & Mercado said Brazil’s 2025/26 harvest was 99% complete as of August 20, compared with 98% at the same time last year. Robusta harvesting was complete, and arabica was 98% finished.

Still, despite the near-completion of the harvest, broader supply-side issues—including weather stress and declining exports—continue to outweigh the potential bearish impact of fresh beans entering the market.

The Bigger Picture

The coffee market now finds itself caught between conflicting forces. On one side are bullish drivers: drought in Brazil, U.S. tariffs, shrinking inventories, weaker exports, and long-term arabica deficits. On the other side are bearish signals, including harvest completion and USDA’s optimistic production outlook.

For now, the bullish momentum dominates. The symbolic $4-per-pound threshold has been breached, highlighting the fragility of coffee supply chains. With climate uncertainty, trade disputes, and tightening stockpiles all in play, volatility looks set to remain a defining feature of the global coffee market in the months ahead.

Brazil Dryness Ahead of Flowering Period Boosts Coffee Prices

Posted on by Qahwa World

Dubai, September 8, 2025 (Qahwa World) – Coffee prices surged today, with December arabica futures rising by +9.65 cents per pound (+2.58%) and November robusta contracts climbing +$119 per ton (+2.76%). The rally comes as severe dryness in Brazil’s coffee-growing regions raises concerns about yields ahead of the critical flowering period. Meteorology agency Somar reported that Minas Gerais, Brazil’s largest arabica-producing state, received no rainfall during the week ending September 6.

Additional support came from Brazil’s crop forecasting agency Conab, which cut its 2025 arabica crop estimate by -4.9% to 35.2 million bags, down from 37 million bags projected in May. Conab also lowered its total coffee production forecast for 2025 by -0.9% to 55.2 million bags.

Meanwhile, the International Coffee Organization (ICO) reported that global coffee exports in July fell -1.6% year-on-year to 11.6 million bags, while cumulative exports for October through July were down -0.3% at 115.6 million bags.

Tighter stocks at the ICE exchange are also supporting prices. ICE-monitored arabica inventories dropped to a 1.25-year low of 686,863 bags last week before slightly rebounding to 692,766 bags. Robusta inventories remain close to a 1.5-month low at 6,552 lots.

U.S. supplies are under additional pressure from trade measures. American buyers have begun canceling contracts for Brazilian beans following the imposition of 50% tariffs on imports, tightening supply as about one-third of U.S. unroasted coffee comes from Brazil.

Harvest progress in Brazil is also influencing prices. Cooxupé, the country’s largest coffee cooperative, reported that its members’ harvest was 94.9% complete by August 29. Separately, Safras & Mercado estimated the national 2025/26 crop at 99% complete by August 20, with robusta fully harvested and arabica 98% complete.

Export data shows a sharp decline. Brazil’s Trade Ministry reported that unroasted coffee exports in July fell -20.4% year-on-year to 161,000 tons. Exporter group Cecafe said green coffee exports were down -28% to 2.4 million bags, with arabica shipments falling -21% and robusta plunging -49%. Total shipments from January through July dropped -21% to 22.2 million bags.

Vietnam, the world’s second-largest coffee producer, also faces challenges. Its 2023/24 crop fell -20% to 1.472 million tons, the smallest in four years, while 2024 exports dropped -17.1% to 1.35 million tons. However, January–August 2025 exports rose +7.8% year-on-year to 1.141 million tons. The Vietnam Coffee and Cocoa Association reduced its 2024/25 output estimate to 26.5 million bags, down from 28 million bags.

Looking ahead, the U.S. Department of Agriculture (USDA) projects global coffee production for 2025/26 to rise +2.5% to a record 178.7 million bags. Arabica output is expected to fall -1.7% to 97 million bags, while robusta production is forecast to grow +7.9% to 81.6 million bags. Ending stocks are projected to climb +4.9% to 22.8 million bags. However, trading group Volcafe warns of an -8.5 million bag global arabica deficit in 2025/26, compared with a -5.5 million bag deficit in 2024/25—marking the fifth consecutive year of shortages.

Tariffs Push U.S. Coffee Industry Into Crisis as Prices Surge

Posted on by Qahwa World

Dubai, September 2, 2025 – (Qahwa World) – The U.S. coffee sector is entering one of its most turbulent phases in decades as new tariffs take hold, global prices soar, and supply chains face renewed disruption. From small roasters to household-name brands, the entire industry is scrambling to cope with higher costs and mounting uncertainty — with consumers ultimately left paying the price.

Prices Climb to Record Highs

According to the latest inflation data, the average retail price of roasted coffee in the U.S. has risen 14.8% since July 2024. In total, coffee prices have jumped 84% since 2021, with the retail price of ground coffee reaching $8.41 per pound in July 2025, up from $4.56 just four years ago.

Globally, the situation is even more alarming. Coffee prices have surged 59% year-over-year, with a 34% spike in August alone. Arabica stockpiles have fallen to less than 14.5 months of supply, the lowest level in a decade, driving specialty coffee prices above $20 for a 12-ounce bag in many U.S. grocery stores.

New Tariffs Reshape the Market

On August 6, the Trump administration imposed a sweeping set of tariffs: 50% on unroasted Brazilian coffee, 10% on imports from Colombia and Ethiopia, 25% on India, and 40% on Myanmar. Mexico remains the only major origin exempt, thanks to the U.S.–Mexico–Canada Agreement (USMCA).

Brazil — the world’s largest producer, responsible for 37% of global supply — is the hardest hit. With its price advantage wiped out, many U.S. roasters are reconsidering long-term sourcing strategies.

China and the European Union are moving quickly to fill the gap. In late August, Beijing approved 183 Brazilian exporters to ship coffee under a new five-year deal, while the EU, which already sources about a third of its coffee from Brazil, has secured additional contracts. These moves could permanently shift trade flows away from the U.S. market.

Roasters and Consumers Under Pressure

The tariffs are squeezing the entire coffee supply chain. Large corporations such as Starbucks and Keurig Dr Pepper can leverage economies of scale, but thousands of smaller roasters are struggling to absorb the shock.

Independent businesses like Elevated Roast in Washington State report tariff costs amounting to 21% of total imports. The owner says he is “eating” half the costs to shield customers, but acknowledges this approach is unsustainable in the long run.

Industry experts warn that roasters operating on thin margins — especially those with existing debt — may face closures if costs continue to rise alongside higher interest rates and restricted access to credit.

Consumers, meanwhile, are being forced to adapt. Coffee remains the most consumed beverage in the U.S., with 66% of adults drinking it daily, according to the National Coffee Association. Yet surveys show changing habits: many households are stockpiling coffee, trading down to cheaper brands, or reducing café visits. At the same time, 71% of Americans report brewing at home at least once a day, compared to just 16% who exclusively rely on cafés.

Political, Legal, and Climate Uncertainty

The tariffs have also sparked political and legal battles. Members of the Congressional Coffee Caucus have called on the administration to exempt coffee imports, arguing that every $1 spent on imported coffee generates $43 in economic value across the U.S. supply chain.

Legal challenges are already under way. A federal appeals court recently ruled that the administration exceeded its authority in imposing the tariffs, but enforcement remains suspended until at least mid-October pending possible Supreme Court review.

At the same time, climate change continues to amplify supply risks. Successive droughts in Brazil and Central America have already reduced yields, and any additional shocks could push prices even higher.

What Lies Ahead

Analysts agree that unless coffee is granted a tariff exemption, volatility will persist. While major players such as Keurig Dr Pepper and JDE Peet’s are pursuing a merger that could bring long-term efficiencies, such strategies will not address immediate disruptions.

The risk, experts warn, is a wave of consolidation in which small and mid-sized roasters exit the market, reducing diversity and competition while leaving the sector more dependent on a few corporate giants.

For consumers, the dilemma remains simple yet unavoidable: adapt to higher prices, change consumption patterns, or cut back altogether. But with coffee entrenched as both a ritual and a cultural staple, scaling back may prove harder than any trade policy shift.

Brazil Weather and U.S. Tariffs Drive Coffee Prices to Multi-Month Highs

Posted on by Qahwa World

Dubai, August 19, 2025 (Qahwa World) – Coffee prices surged on Tuesday, with arabica futures climbing to a 2.25-month high and robusta reaching a two-month high, supported by dry conditions in Brazil’s key growing regions and tightening U.S. supplies following new tariffs on Brazilian coffee.

September arabica coffee (KCU25) rose 1.85% (+6.35¢/lb), while September ICE robusta (RMU25) gained 4.04% (+$168). The rise reflects mounting concern over Brazil’s weather, particularly in Minas Gerais, the country’s largest arabica-producing state, where Somar Meteorologia reported no rainfall during the week ending August 16.

Market support is also coming from the United States, where buyers are avoiding new contracts for Brazilian coffee due to a 50% tariff imposed on imports. Brazil typically supplies about one-third of U.S. unroasted coffee, making the tariff impact significant for roasters and traders.

Brazil’s July export figures further underscored supply concerns. According to the Trade Ministry, unroasted coffee exports fell 20.4% year-on-year to 161,000 metric tons. Exporter group Cecafé reported that green coffee shipments dropped 28% y/y to 2.4 million bags, while total coffee exports fell to 2.7 million bags. From January to July, Brazil’s overall exports declined 21% to 22.2 million bags.

Certified exchange inventories remain tight. ICE arabica stocks fell to a 1.25-year low of 726,661 bags on August 14 before recovering slightly to 733,105 bags this week. ICE robusta stocks dropped to a three-week low of 6,749 lots, down from late-July’s two-year high of 7,029 lots.

On the supply side, Brazil’s 2025/26 coffee harvest is advancing. Research firm Safras & Mercado estimates the crop was 94% complete as of August 6, with robusta nearly finished (99%) and arabica at 91%. Cooxupé, Brazil’s largest coffee cooperative, reported its members had completed 80.4% of their harvest by August 8.

Beyond Brazil, Vietnam’s coffee industry continues to influence robusta prices. Drought reduced 2023/24 production by 20% y/y to 1.47 million metric tons, the lowest in four years, while 2024 exports fell 17.1% to 1.35 million metric tons. However, recovery signs emerged with January–July 2025 exports up 6.9% y/y to 1.05 million metric tons.

The International Coffee Organization (ICO) reported that global coffee exports in June rose 7.3% y/y to 11.69 million bags, though October–June totals slipped 0.2% to 104.14 million bags.

Looking ahead, the USDA’s Foreign Agricultural Service (FAS) projects 2025/26 world coffee production at a record 178.7 million bags, up 2.5% year-on-year. Arabica output is expected to fall 1.7% to 97 million bags, while robusta is forecast to rise 7.9% to nearly 82 million bags. Ending stocks are projected to grow 4.9% to 22.8 million bags.

However, trader Volcafe sees a very different balance: a global arabica deficit of 8.5 million bags in 2025/26, the fifth consecutive year of shortages and larger than the 5.5 million bag deficit recorded in 2024/25. This highlights continued market tightness despite record overall supply projections.