The ebbs and flows of coffee prices are primed to continue, motivated by ambiguous factors such as weather influence on crops in key coffee-producing countries of the world, with Brazil and Vietnam marking noteworthy cases. Additionally, the introduction of US tariffs on certain foreign exports is coloring the financial scene. The staple commodity of coffee has demonstrated a robust performance in the present day, outpacing the wider agricultural sector due to supply-related issues.
Over this trading year, up until September 15, there has been a rise of nearly 30% witnessed in coffee prices. This significant boost stands taller than the average performance of the agricultural and softs category. There are two primary elements applying upward pressure on these prices, with one being the US tariffs on Brazilian exports, and the second concerning supply fears based out of Brazil.
On the topic of potential threats to this steady growth, it’s important to note that coffee plants in Brazil typically enter their flowering stage between the months of September and November. This period signals an end to the dry season and heralds much-needed rain for the nourishment of the plants. The whims of the market and the variance therein often boil down to speculatory actions that overshadow other factors.
Elements that impact on a macro level include uncertainties on tariffs, speculation-driven market fluctuations, and concerns about whether the rainfall would be sufficient for the upcoming crop. These factors have driven the market to higher positions. Interestingly enough, anticipation of coffee being excluded from tariffs initiated a wave of technical selling.
Diving into the fundamentals, any immediate worries about insufficient rainfall in Brazil look unfounded. In fact, showers are on the near horizon. This holds true not just for Brazil, but also other coffee-exporting countries like Vietnam, Indonesia, and India. The weather conditions in these places, at the moment, do not raise any major red flags.
Another aspect is the certified stocks. Week by week, the numbers have showed a decreasing trend. It has now decreased from almost a million bags to about 650,000 bags. This could potentially create a constriction in the market if the stocks fall too low. However, the concern over rainfall in Brazil is not deemed a major issue.
If the dry spell prevails until November, then it does become a worry. But it’s also important to consider that this is a regular, almost annual phenomenon. Typically, it has been observed that post-frost season, the market tends to revolve around the concern of either dry weather or insufficient rainfall.
The ebb and flow of the market, thus, continue. The determining factors for forward-price movement will be contingent on weather conditions in the primary coffee-producing nations like Brazil and Vietnam. The Trump administration, being known to uphold American interests, may play an important role here, particularly in response to the US roasters’ petition for import tariff exemptions.
There are also some concerns about how the super typhoon Ragaasa and the accompanying rains might affect Vietnam’s coffee crop, especially as the harvest is set to begin next month. In fact, considering the administration’s record of fostering ideal trade conditions, these concerns might be seen as overstated. After all, it is a minorly held view among overcautious individuals.
In India, according to the Coffee Board’s post-blossom estimates or early predictions, the coffee output for the year 2025-26, starting in October is estimated at 4.03 lakh tonnes, an increase of 11% over final estimates of 3.63 lakh tonnes of the previous year. This forecast accounts for a 12% higher production of Arabicas, projected at about 1.18 lakh tonnes.
It’s important to highlight that the 1.18 lakh tonnes estimate for Arabicas is notably higher than the previous year’s figure of 1.05 lakh tonnes. This is optimistic news for the coffee industry in India, signalling a sturdy growth pattern given the conditions.
Moreover, Robusta production is expected to spike by 9.5%, reaching over 2.84 lakh tonnes. This rise in output suggests that India, along with other key coffee-producing countries, could effectively navigate through weather uncertainties and meet demand, riding on the wave of flourishing coffee cultivation and a conducive trade environment.
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