Coffee Price Outlook: Weather Risks in Brazil and Market Drivers
Coffee prices surge due to increased weather risks in Brazil, the largest coffee-producing country in the world, potentially impacting the global coffee market.
The global coffee market is currently facing a bearish short-term outlook, driven by a projected record high coffee production for the 2025/26 marketing year [1][2]. According to the USDA's biannual report, released on June 25, world coffee production is expected to increase by 2.5% year-over-year to a record 178.68 million bags [2].
While arabica output is forecast to decline slightly (-1.7%), robusta production is projected to rise sharply (+7.9%), reflecting a shift toward higher-yielding, less weather-sensitive varieties [1][2]. Ending stocks are also expected to climb by 4.9%, suggesting a well-supplied market [1][2]. However, it is important to note that despite robust global supply, the world is entering its fifth consecutive year of arabica coffee deficits, with 2025/26 looking at a wider shortfall of 8.5 million bags compared to 5.5 million bags the year before [1][2]. This arabica deficit could provide some underlying support for prices, especially if demand remains robust or if weather disruptions materialize.
Weather Risks in Brazil
Brazil, the world’s largest producer of arabica coffee, remains a critical wildcard for global coffee prices due to its vulnerability to weather shocks. In June 2025, coffee prices saw a temporary spike following news of frost in São Paulo and Minas Gerais, two major coffee-growing regions [4]. However, subsequent weather reports eased frost concerns, and the rally was short-lived. This episode highlights the market’s sensitivity to any signs of adverse weather in Brazil, but such risks have thus far not significantly dented the overall supply outlook.
Recent Price Trends
Coffee prices have been volatile but generally trending downward recently, with arabica slumping to a more than six-month low in late June 2025 [2]. The International Coffee Organization’s Composite Indicator Price (I-CIP) averaged 295.06 US cents/lb in June 2025, down 11.8% from the previous month, mainly due to ample supply [4]. Certified coffee stocks reached a nine-month high in May, exerting additional downward pressure before a mild decline in June [4]. As of July 25, 2025, coffee traded at 297.65 US cents/lb, down 2.52% on the day and 3.3% over the past month, but still up 29.2% from a year ago [3].
Future Projections
Market analysts expect coffee prices to remain under pressure in the near term due to robust global production and higher stocks, but with potential for volatility if weather risks resurface in Brazil or other major producing regions [1][2][4]. Longer-term, some models project a rebound, with coffee expected to trade around 342.78 US cents/lb in 12 months [3].
Summary Table: Key Coffee Market Trends and Outlook
| Factor | Current Status (Mid-2025) | Outlook | |---------------------------|-----------------------------------------|--------------------------------------| | Global Production | Record high, robusta up, arabica down | Likely to keep prices contained [1][2]| | Global Stocks | Increasing | Bearish for prices [1][2] | | Arabica Deficit | Widening | Underlying support for arabica [1][2] | | Weather Risks (Brazil) | Frost scare in June, risk abated | Remains a volatility trigger [4] | | Price Trend | Downward, but still above year-ago | Possible rebound in 12 months [3] |
Conclusion
- Bearish short-term outlook: Ample global supply, increased robusta production, and rising stocks are putting downward pressure on coffee prices [1][2][4].
- Arabica deficit: The widening gap in arabica supply could provide some support if demand remains strong or if production is disrupted [1][2].
- Weather sensitivity: The market remains highly sensitive to weather risks in Brazil, but recent frost worries did not result in sustained price gains [4].
- Expect volatility: Prices may remain volatile, especially if adverse weather re-emerges, but the overall supply picture is currently the dominant driver [1][2][4].
In summary, coffee prices are expected to stay under pressure from strong global supply, but traders should watch for weather disruptions—especially in Brazil—that could quickly shift market sentiment and price direction [1][2][4]. As of July 16, 2025, Brazil's overall 2025/26 coffee harvest was 77% complete, according to Safras & Mercado.
- The projection for environmental science reveals a potential shift in coffee farming towards higher-yielding and less weather-sensitive varieties of robusta coffee, which could have implications for the future of business in the coffee industry.
- In the realm of technology and finance, it's interesting to observe how weather risks in major coffee-producing regions like Brazil can significantly impact the global market, causing volatile price trends and necessitating careful risk management strategies in the lifestyle sector.
- As sports enthusiasts savour a comforting cup of coffee, it's worth considering the complex interplay between science, technology, and business, as well as the environmental factors influencing global coffee production and its impact on our daily lifestyle.
