Executive Summary
Coffee markets remain volatile entering 2025. Arabica and Robusta prices have reached historically elevated levels due to climate disruptions, tight inventories, and structural supply constraints. Forecasts suggest that prices may remain high through much of 2025 before easing in 2026 as supply improves. However, weather risks and demand trends continue to exert upward pressure, making volatility a defining feature of the market.
1. Current Market Situation
Arabica
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Prices surged through 2024–2025 due to adverse weather in Brazil and Colombia.
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The market is characterised by reduced stock levels, strong demand for high-quality beans, and ongoing climate uncertainty.
Robusta
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Vietnam’s production fluctuations and increased global demand for instant and RTD coffee have pushed Robusta prices to multi-year highs.
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Many roasters shifted from Arabica to Robusta blends, further tightening supply.
2. Price Forecasts (2025–2027)
2025 Forecast
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Arabica: Expected to rise significantly in early 2025, with year-on-year increases of more than 50% in some forecasts.
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Robusta: Predicted to rise by roughly 20–25% in 2025 due to ongoing supply tightness.
2026 Forecast
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With improved harvests in Brazil, Colombia, and Vietnam, prices are projected to ease:
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Arabica: Possible decline of around 10–15%.
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Robusta: Expected to fall by 8–10%.
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Despite the decline, both remain above pre-2022 averages.
2027 Forecast
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Stabilisation expected, assuming normal weather patterns.
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Long-term climate impacts could prevent a full return to historically low price levels.
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Market may settle into a “new normal” with higher average prices and greater volatility.
3. Key Market Drivers
a. Climate and Weather Risks
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Drought, unseasonal rain, and rising temperatures in Brazil and Vietnam remain the greatest threats to supply.
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Even minor disruptions can trigger sharp price spikes due to tight inventories.
b. Global Demand Growth
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European consumption continues to rise for premium, specialty, and sustainable coffees.
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Growth in Asia—especially China and South Korea—is adding pressure on global supply chains.
c. Currency Movements
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Depreciation of producer-country currencies (e.g., Brazilian real, Colombian peso) can temporarily ease global prices by incentivising export volumes.
d. Logistics and Input Costs
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Fertiliser prices, shipping costs and labour constraints influence production costs and farm-gate pricing.
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While easing from pandemic peaks, these remain above historical norms.
4. Risks to the Forecast
Upside Risks (prices higher than predicted)
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Severe weather events in Brazil or Vietnam.
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Disease outbreaks, such as coffee leaf rust.
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Accelerated global demand for premium or specialty coffees.
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Supply chain shocks or geopolitical tensions.
Downside Risks (prices lower than predicted)
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Exceptionally strong harvests.
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Currency strengthening in exporting countries.
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Slowing consumer demand in Europe or North America due to economic pressures.
5. Outlook for Industry Stakeholders
For Retailers and Roasters
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Expect continued price instability.
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Long-term contracts may offer protection against spikes.
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Increasing reliance on Robusta blends likely to continue through 2026.
For Producers
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Elevated price environment offers revenue opportunities.
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Investments in climate resilience (shade trees, irrigation, resistant varieties) are becoming essential.
For Importers and Traders
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Risk-management strategies (hedging, diversified origins) will be crucial in navigating volatility.
Conclusion
Coffee prices are expected to remain high through 2025, with meaningful declines unlikely before 2026. Climate remains the dominant factor shaping supply and pricing. While some normalisation is anticipated by 2027, market volatility will remain a structural feature due to rising global demand and environmental pressures.