Coffee Prices Face New Threats from Tariffs and Drought
Coffee markets are once again in flux. Fernando Maximiliano, Coffee Market Intelligence Manager at StoneX, offers a comprehensive update on global coffee dynamics heading into 2025.
Key Takeaways
Brazil’s arabica production could fall 10% in 2025 due to drought and frost
El Niño and logistics disruptions hit Vietnam’s robusta output in 2024
Proposed US tariffs raise investor uncertainty with no clear industry benefit
Weather Disruptions Still Lead Price Movements
Weather continues to be the dominant force in coffee pricing. As Maximiliano explains, Brazil has faced significant weather issues since 2020, including droughts, La Niña and El Niño phases, and frost events. These conditions disrupted flowering and crop yields. Vietnam, the top robusta producer, also saw output fall due to similar climate impacts, tightening supply and driving price surges through 2024.
Robusta Took the Lead in 2024
Unlike previous years when arabica set the tone, the robusta market drove pricing in the first three quarters of 2024. “We saw a very tight supply and demand balance for robusta” due to El Niño’s effects in Vietnam and lower output in Indonesia. London robusta futures became the global benchmark, displacing New York arabica references temporarily.
Arabica Returns to the Spotlight
By Q4 2024, arabica returned to the centre of pricing discussions. After an optimistic start to the Brazilian growing season, weather turned adverse in August with polar masses, drought, and even fires affecting flowering. “We were the first to publish the estimates... that the arabica crop would be at least 10% lower” in 2025–26.
Tariffs Compound Uncertainty for 2025
Geopolitical risks and proposed US tariffs are further complicating the picture. Maximiliano notes that although initial policy suggested Brazil might benefit, investor risk aversion intensified across commodities, including coffee. The US National Coffee Association also warned that tariffs would hurt domestic roasters since the US produces no coffee.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Raphael Bulascoschi, StoneX Brazil Market Intelligence Analyst
Coffee
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