Tariffs or Drought – What’s Really Driving Stubbornly High Coffee Prices?
Coffee prices have seen their highest levels in years as tight supply, drought, and trade uncertainty converge. For growers and consumers alike, the pressures shaping this market aren’t going away soon.
Key Takeaways
- Weather, not trade policy, is keeping coffee expensive
- Year five of the Brazilian drought continues to squeeze supply
- Some consumers are pulling back as costs climb
Even with tariff talks back on the table, the market remains tight with prices still climbing. That dynamic isn't likely to change for the foreseeable future, according to StoneX Coffee Market Intelligence Manager Fernando Maximiliano.
In a recent interview with Bloomberg, Maximiliano stressed that, in his view, climate, not tariffs, is the real driver of record prices. “Tariffs are an extra layer, but the real problem is tight supply,” due to persistent drought conditions, he said.
Drought in Brazil Leaves Coffee Supplies Under Pressure
Brazil produces close to 40% of the world’s coffee, and parts of the country have faced drought almost every year since 2020. Minas Gerais, its main growing region, has seen rainfall well below normal.
That shortfall has drained inventories and pushed Arabica contracts roughly 40% higher since August – while Robusta, used in instant blends, is up about 37%. “People are cutting back,” Maximiliano added. “That’s what’s balancing the market right now.”
Climate Continues to Fuel Unease Among Growers
Some rain has returned, easing stress on Brazil’s crops for now.;but growers remain uneasy. Studies show that by 2050, only about half of today’s coffee-growing areas will still be suitable as temperatures rise. Farmers and researchers are already shifting strategy. But changes like mapping cooler zones, testing new strains, and expanding irrigation take both money and time. They also mean the cost of production, and likely the price of coffee, will keep edging up.
For Maximiliano, that’s the real story: “Weather risk doesn’t go away when a tariff does,” he said.
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