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Trade4go
Feb 28th, 2025
Original content
Brazil's coffee production for the 2025/26 harvest is expected to decline by 8% to 59.75 million 60-kilogram (kg) bags, primarily due to last year's drought and greater-than-anticipated pruning. Arabica production is forecasted to fall by 16%, while Robusta is expected to increase by 8%. With Brazil being the world's largest coffee producer and exporter, this reduction could impact global supply, especially as other countries face deficits. The smaller Arabica yield may lead roasters to adjust their blends, using more Robusta. Brazil's exports could drop by 22%, and domestic consumption is also expected to decrease by 4.5%. This could result in tight supply and higher consumer prices.
Brazil’s coffee export volume declined during the first ten working days of Feb-25, with daily shipments averaging 10,072 tons, an 11.6% drop compared to the same period in 2024. The total quantity exported in the first ten days reached 100,723 tons, far below Feb-24's total of 216,518 tons. However, the revenue from these exports increased, with earnings reaching USD 595.7 million, up 50.8% from the previous year.
In early 2025, Brazil's supermarket sector is facing challenges with increasing product shortages, particularly coffee, which saw a 2.1% rise in stockouts from Dec-24 to Jan-25. Coffee shortages reached 11.1%, and prices rose by up to 66% over the last year, further straining consumer budgets. Linked to climate impacts on production, this shortage reflects broader supply chain issues exacerbated by slow stock replenishment due to economic downturns and reduced purchasing power. Despite recent rains in coffee-growing regions, producers remain cautious of potential temperature spikes that could impact harvests.
Brazil's coffee market continues to struggle with significant challenges, primarily driven by adverse weather conditions and economic fluctuations. After a prolonged drought until Sep-24, rains returned to producer regions, benefiting flower blooming and grain filling, but the climate turned dry and hot again in Feb-25, raising concerns for the 2025/26 harvest. Meanwhile, domestic coffee prices are rising, increasing the strain on consumers' budgets. Projections for 2025/26 indicate a 4.9% drop in Arabica production, while Conilon is expected to recover with a 14.3% increase. Global uncertainties, including limited supplies in Vietnam and Central America, contribute to a global coffee deficit. The market faces volatility, and global coffee supply may struggle to meet demand through 2025/26.
Colombia, a major producer of Arabica coffee, is set to see a 3.95% increase in production for the 2024/25 coffee year. With two harvests per year, Colombia's output is forecasted to reach 13 million 60-kg bags, with exports expected to rise by 9.96% to 11.2 million bags. This growth comes as the country looks to meet the continued demand for high-quality Arabica coffee in international markets. The increased production and export volumes are expected to further solidify Colombia's position as a key player in the global coffee market.
Ethiopia has seen impressive growth in coffee exports, with over 200,000 tons shipped in the first half of the 2024/25 season. The exports generated USD 908 million in revenue, surpassing its initial target of USD 714 million. The Ethiopian Coffee and Tea Authority (ECTA) attributes this success to recent industry reforms aimed at improving quality, output, and productivity. In the previous fiscal year, Ethiopia earned over USD 1.4 billion from coffee exports. The country now aims to export over 400,000 tons of coffee this fiscal year, targeting USD 2 billion in foreign exchange earnings.
Honduras, the third-largest coffee producer in the Americas, is exploring alternative markets, including Russia, for its coffee exports due to increasing restrictions from the European Union (EU). With the EU's upcoming forest law requiring proof of sustainable production and trade practices, Honduras faces challenges, especially small producers. In response, the country is considering markets like Russia and China, which offer growth potential. While the EU remains a key market, the uncertainties around trade policies and the implementation of new regulations have prompted Honduras to look for diversification in its export strategy.
In Jan-25, Peru's coffee exports saw a sharp decline in both volume and value, despite higher prices. The country exported 6,343 tons of coffee worth USD 34.5 million, marking a 77% drop in volume and a 64% decrease in value compared to the previous year. However, the average price rose by 52%, reaching USD 5.43/kg. The United States (US) remained the top destination, followed by Germany and Belgium. Despite these figures, global concerns about coffee supply shortages, particularly from Brazil and Vietnam due to adverse climate conditions, have created opportunities for Peru's coffee exports, although the year began with weak export performance.
Uganda's coffee exports saw a significant increase of 83.4% in Jan-25 compared to the same month last year, driven by higher global coffee prices. Uganda shipped 550,341 60-kg bags of coffee valued at USD 156.5 million. This growth was also reflected in a 14.4% rise in the quantity of coffee exported. The price hike was attributed to dry weather conditions in Brazil and Vietnam, which impacted global supply.
Vietnam's coffee market is grappling with limited supply due to reduced production, coupled with low inventories. Coffee consumption in the country remains half the global average, affecting local dynamics. The Vietnamese province of Đắk Lắk, a key coffee-growing area, has announced it will not expand planting areas until 2030 but will focus on improving quality and enhancing processing capabilities to strengthen its position in the export market. This strategic shift is aimed at meeting the increasing demand from international markets while addressing domestic supply constraints.
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In W8, coffee prices in Brazil showed a slight drop of 2.39% week-on-week (WoW) to USD 8.98/kg. This drop signals a stabilization phase, after pricing reached the highest peak over the past year in W7 at USD 9.20/kg. Despite this WoW decline, month-on-month (MoM) prices increased by 7.93% and 59.50 % year-on-year (YoY). This price increase is driven by a prolonged drought threatening future production, particularly in Minas Gerais, strong early-season exports that have strained domestic supply, and rising domestic demand. Looking ahead, Brazil's coffee production for the 2025/26 harvest is expected to decline by 8%, totaling 59.75 million 60-kg bags, largely due to last year's drought and increased pruning, which will likely continue to exert upward pressure on prices throughout the year.
In W8, Colombian coffee prices reached USD 7.86/ kg, marking a 1.95% WoW and 4.52% MoM increase, driven by growing demand amid tight supply globally, along with Colombia's expanding coffee exports. However, despite these recent increases, prices remain 10.99% lower YoY due to a significant 26% rise in Colombia’s total coffee harvest over the past year, which has eased supply concerns compared to last year. Looking ahead, Colombia’s coffee production for the 2024/25 coffee year is projected to increase by 3.95%, reaching 13 million 60-kg bags, with exports expected to rise by 9.96% to 11.2 million bags. This steady growth in production and exports may help stabilize prices in the coming months.
In W8, Vietnam’s coffee prices reached USD 5.19/kg, reflecting a 0.39% WoW and 2.77% MoM increase as farmers continue to withhold sales, anticipating further price hikes despite strong demand. The surge is driven by adverse weather conditions that have pushed Vietnam’s Robusta output to a 25-year low, exacerbating the already tight global supply. Additionally, a 5% decline in Vietnam’s 2024 coffee production has reduced stock availability, while low inventories further strain the market. With Vietnam’s coffee consumption making up half the global average, local market dynamics are also affecting supply flows. Looking ahead, supply is expected to remain tight, as the country’s coffee production area is not anticipated to expand, keeping upward pressure on prices in the coming months.
The tight Arabica supply and rising prices will push roasters to adjust blends by incorporating more Robusta, particularly from Vietnam and Uganda. As Robusta prices remain more stable, companies should explore reformulating products while maintaining quality. Expanding premium Robusta offerings can meet consumer demand at more competitive pricing.
Countries like Vietnam, Ethiopia, and Honduras should prioritize expanding processing infrastructure to increase value-added coffee exports (e.g., instant coffee, roasted beans). As Brazil’s ground and roasted coffee prices surge, other exporters can position themselves as cost-effective alternatives by investing in advanced processing facilities.
Emerging markets such as China and India present significant growth opportunities for coffee consumption. Producers should focus on educational campaigns to introduce high-quality Arabica and Robusta varieties, positioning coffee as a premium beverage through specialty marketing, retail collaborations, and direct-to-consumer channels.
Sources: Tridge, Agraria PE, Agro Peru, Canal Rural, Food Mate, Kvedomosti Notícias Agrícolas, Portal do Agronegócio, Vina Net
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