Global coffee prices have climbed sharply over the past year, driven by a rare combination of weather disruptions, tight inventories, and trade-related shocks, pushing the market into one of its most volatile phases in decades.
In Brazil, the world’s largest coffee producer, three consecutive years of adverse weather—including prolonged droughts, heatwaves, and sporadic frosts—have significantly reduced output. Growers in Minas Gerais, the country’s main arabica-growing region, reported rainfall at just 17% of the historical average in the week ended December 26, intensifying concerns over the 2025 crop. Brazil’s supply shortfall, along with reduced output from Vietnam, has removed an estimated 10 million bags, or about 6% of global consumption, from the market.
Coffee futures reflect these pressures. Arabica prices on ICE recently touched levels unseen in years, with a 60-kg sack peaking at $445 earlier this year before easing. Robusta prices have also remained elevated, supported by flooding in Indonesia, which could cut exports by up to 15% in the 2025–26 season. Indonesia is the world’s third-largest robusta producer.
Global inventories remain fragile. ICE-monitored arabica stocks fell to a 1.75-year low in November, while robusta inventories hit a one-year low in December, underlining supply tightness despite modest recoveries in recent weeks.
Trade dynamics have added to volatility. U.S. imports of Brazilian coffee dropped 52% year-on-year during a period of elevated tariffs, forcing exporters to divert shipments to Europe. Although tariffs have since been reduced, U.S. inventories remain tight.
Looking ahead, forecasts remain mixed. Brazil’s Conab has raised its 2025 production estimate slightly, while the USDA projects record global output in 2025–26, led by higher robusta production in Vietnam. However, lower arabica output and declining global ending stocks suggest price volatility may persist into 2026.
