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Trade4go
Mar 14th, 2025
Original content
The global coffee trade has slowed significantly as buyers cut purchases due to a sharp price surge. Arabica futures on the Intercontinental Exchange (ICE) rose 70%, with wholesale prices reaching USD 7.5 per kilogram (kg), exceeding 1970s records. Roasters struggle to pass costs to retailers, leading to stock shortages and contract cancellations at United States (US) port warehouses. Reduced production in key regions like Brazil is a primary driver, though expanded coffee planting in India, Uganda, Ethiopia, and Brazil could ease prices by 2026. Although forecasts predict a 30% price drop by year-end, many traders may exit the market before conditions improve.
Extreme heat and prolonged drought are severely impacting Brazil’s coffee crops, raising concerns over reduced yields and lower-quality beans for the 2025 harvest. High temperatures are disrupting photosynthesis, causing malformed cherries and damaging leaves, while water stress worsens bean development, particularly in late-blooming crops. Early-flowering plantations fare better, having reached advanced growth stages. Experts recommend protective measures like nutrient-balanced fertilization, irrigation, and sun-blocking treatments to mitigate losses. With climate risks escalating, Brazilian coffee farmers must adopt adaptive strategies to safeguard productivity and quality.
In Feb-25, Brazil’s daily exports of unroasted coffee fell 20.5% year-on-year (YoY) to 8,608 tons, with total monthly shipments declining from 216,518 tons in Feb-24 to 172,170 tons in Feb-25. Despite lower volumes, total export revenue surged to USD 1.03 billion, a 37.3% increase driven by higher prices, with the average export price jumping 72.7% YoY to USD 5,987.50/ton. Meanwhile, roasted coffee, extracts, and concentrates saw a 41.7% rise in export revenue to USD 86.96 million, despite a slight 1.6% drop in volume. The average price of these products surged 44% YoY to USD 12,379.30/ton, highlighting strong price gains amid tightening supply.
From Mar-24 to Feb-25, Colombia's coffee production reached 14.795 million 60-kg bags, marking the highest total since 1996, according to the National Federation of Coffee Growers. This 42% increase compared to the previous year’s total of 11.375 million bags was attributed to the dedication of 557,000 coffee-growing families. Feb-25 alone saw a 42% rise in production, reaching 1.361 million bags. Coffee exports also grew by 17% in Feb-25, with 12.68 million 60-kg bags sold internationally, compared to 10.8 million the previous year. The coffee sector remains a key contributor to Colombia's agricultural and economic growth.
Vietnam exported 303,000 metric tons (mt) of coffee from Jan-25 to Feb-25, marking a 23.5% YoY decline, according to government data. However, export revenue surged 37% to USD 1.7 billion, driven by higher global coffee prices amid tightening supply. The General Statistics Office also revised January's export volume down from 140,000 to 134,000 tons.
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Yearly Change in Coffee Pricing Important Exporters (W10 2024 to W10 2025)
Brazil's coffee prices have experienced a 2.54% week-on-week (WoW) and 12.50% month-on-month (MoM) decline as of W10, with prices at USD 8.05/kg. This follows a peak of USD 9.20/kg in Week 7, signaling a market correction driven by factors like currency fluctuations. However, prices have increased by 34.17% YoY, reflecting strong domestic consumption, rising demand for premium specialty coffees, and robust export activity, especially in the US, Belgium, and Germany. Despite lower export volumes, revenue growth and higher prices for unroasted and roasted coffee indicate a tight supply and premium market. Ongoing climate risks, including heatwaves and droughts, threaten Brazil's 2025 crop, potentially leading to further price increases due to reduced yields and lower-quality beans, although increased planting may help stabilize supply if the harvest is strong.
In W10, Colombia's coffee prices rose to USD 8.99/kg, marking a 9.37% WoW and 16.60% MoM increase, with an 8.31% YoY rise. This surge is primarily driven by growing global demand, tight coffee supply, and Colombia's expanding coffee exports, which have contributed to higher prices despite recent market adjustments. The rebound follows a period of stabilization, highlighting an active response to the increasing demand for Colombian coffee. However, prices could face downward pressure in the near future as Colombia's coffee production reached 14.795 million 60-kg bags from Mar-24 to Feb-25, the highest since 1996. With this increased supply, there is potential for price stabilization or even a decline, as the higher output could help meet global demand and reduce market tightness.
In Week 10, Vietnam's coffee prices settled at USD 5.12/kg, reflecting a minor 0.39% WoW and 0.97% MoM decline, indicating relative market stability. These price drops could be attributed to a 23.5% YoY decrease in exports from Jan-25 to Feb-25, with Vietnam shipping 303,000 mt of coffee, which may have contributed to reduced market activity. However, prices could rise in the future as farmers continue to withhold sales, expecting further price increases amid strong demand. The market remains under pressure due to Vietnam's Robusta output hitting a 25-year low due to adverse weather conditions, leading to tighter global supply.
The ongoing heatwaves and droughts in Brazil pose a significant threat to the 2025 coffee harvest. Coffee producers and exporters should stay updated on climate conditions and, where possible, implement risk mitigation strategies like diversified harvest planning and pre-ordering from countries like Colombia, which is seeing an increase in production. Contracts should include clauses to address weather-related price fluctuations and potential delays.
The continued withholding of sales by Vietnamese farmers in anticipation of price hikes indicates a strategic opportunity to build closer relationships with farmers. Establishing long-term partnerships that involve price guarantees and technical assistance could secure more consistent supply and mitigate market volatility. Encouraging farmers to adopt sustainable and adaptive farming practices could also help stabilize production amid challenging weather conditions.
As coffee prices remain volatile, especially with the predicted price drops in Brazil and potential increases in Vietnam, it is crucial for businesses to implement price risk management strategies. Forward buying options, hedging, and dynamic pricing models based on market forecasts could provide more stability and protect against adverse price movements. Engaging in long-term contracts with fixed pricing for bulk purchases could also shield buyers from sudden price spikes.
Sources: Tridge, Noticias Agrícolas, Portal do Agronegocios, RGRU, Safras & Mercado, Unian UA, VOH
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