Coffee Weekly Report

In the Brazilian domestic market, the Cepea indicator for arabica coffee posted a slight drop of 0.5% to R$ 1,728.50 per bag. Meanwhile, the Cepea indicator for robusta coffee fell more sharply, by 6.8%, to R$ 1,012.75 per bag.

Pressure on coffee prices, particularly in Brazil's domestic market, is related to the harvest progress and increased coffee availability in the domestic market. As of July 14, 73.3% of the Brazilian crop had already been harvested, with robusta further along (88.8%) and arabica at 62.9%.

The faster progress of the robusta harvest increases its availability in the domestic market and contributes to price pressure. Additionally, despite the drop in Brazil's arabica production, robusta output is expected to grow nearly 22%, reaching 25.8 million bags, adding further pressure on prices.

Coffee harvest progress in Brazil

Source: StoneX. 

The coffee market continues to react to President Donald Trump's announcement last Wednesday regarding the 50% tariff on Brazilian coffee imports. These tariffs would have a severe impact on the sector, given the strong trade relationship between Brazil and the US in the coffee market.

In 2024, more than 16% of Brazil’s coffee exports—over 8 million bags—were destined for the United States, its largest customer and the world’s biggest coffee consumer. On the American side, Brazil accounted for 34% of all US coffee imports.

If these tariffs are implemented, they would reduce the competitiveness of Brazilian exports and severely impact the American industry, which relies heavily on Brazilian coffee. Most US coffee imports are arabica, making it difficult for the country to find alternative suppliers.

To illustrate, in 2024, over 80% of US coffee imports were arabica. The second-largest global arabica producer, Colombia, produces between 12 and 13 million bags—far below Brazil’s 40 to 50 million—and already ships most of that to the US.

Thus, it would be very difficult for the US to replace Brazil as a source for its arabica demand. The American coffee industry employs over 2.2 million people and, according to NCA data, every dollar spent on imported coffee generates $43 within the domestic economy.

Besides industry, American consumers would also feel the impact, facing inflationary pressure on coffee prices, which have already been rising in recent years.

It’s worth noting that, in addition to Brazil, the US also imposed tariffs on other major suppliers: 10% on Colombia, 20% on Vietnam, 32% on Indonesia, 30% on Mexico, and 30% on the European Union. Mexico is also an important supplier of green coffee to the US, while Europe exports industrialized coffee.

These measures further increase costs for importers and the American coffee industry, which now faces pressure from multiple directions.

In practice, if these measures are actually implemented, the outlook is bullish for coffee prices in New York, as the exchange reflects the US domestic market. At the same time, the coffee that would no longer be exported to the US would pressure prices in the Brazilian market due to increased domestic supply. Meanwhile, prices in other origins could rise as US buyers seek alternatives to Brazilian coffee.

Regarding the robusta market, Vietnam—one of the world’s top exporters—has shown notable changes in export performance throughout the crop year. While early in the cycle (October to September), exports were weak, with declines of 49.7% in November, 39% in December, and 41% in January, the last few months saw a rebound, with growth of 9.8% in April, 107.9% in May, and 69.5% in June.

This export recovery in Vietnam has a bearish effect on robusta prices. However, on a cumulative basis, Vietnamese exports are still 10.3% below the average and 6.8% below the previous season.

In June, Vietnam exported 1.98 million bags, compared to 1.17 million in the same month last season. Cumulatively through June, 19.55 million bags have been exported this crop year, compared to 20.96 million at the same point in the previous season.

Vietnam coffee exports: monthly (left) and cumulative crop year (right

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  Source: Vietnam Customs. Prepared by StoneX.

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The coffee market will continue to monitor the developments surrounding the tariffs and their impacts on the trade chain, the dollar, exchange rates, and macroeconomic factors.

Attention will also be given to Brazil's official export figures, which are scheduled for release tomorrow, July 15, at 4 p.m., in a press conference held by Cecafé.

Additionally, the market is watching weather conditions. In the coming months, rainfall will be essential to ensure proper flowering in arabica regions. In Espírito Santo, rains in early July have already triggered an early flowering in robusta coffee areas.

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