Coffee Prices Surge on Dry Weather in Brazil and Tighter U.S. Supplies
Dubai, 21 August 2025 (Qahwa World) – Coffee prices continued their sharp rally this week, reaching multi-month highs as drought in Brazil, tighter U.S. supplies, and falling inventories combined to fuel bullish sentiment in global markets. September arabica coffee (KCU25) closed up +4.05 cents (+1.14%), while September robusta coffee (RMU25) jumped +236 points (+5.35%), marking the strongest levels for arabica in more than two months and for robusta in two and a half months. The upward trend has now extended for over two weeks, signaling growing concerns among traders and roasters alike.
Much of the momentum is driven by weather conditions in Brazil, the world’s largest producer. Somar Meteorologia reported that Minas Gerais, the country’s main arabica-growing state, received no rainfall during the week ending August 16. Dry conditions at this stage of the harvest have spurred funds and speculators to increase their positions in coffee futures. While dryness helps in harvesting ripe cherries, prolonged lack of rain threatens the health of trees and could affect the next cycle’s yield, especially for arabica, which is more sensitive to climatic stress.
At the same time, the United States, one of the biggest coffee importers, is facing its own supply squeeze. Following the imposition of 50% tariffs on Brazilian coffee exports, American buyers have been avoiding new contracts and seeking loopholes in existing ones to escape the higher levies. Some have even requested extended shipping timelines in hopes that trade restrictions may eventually ease. With about a third of unroasted coffee consumed in the U.S. normally sourced from Brazil, the tariffs have significantly tightened the market.
Export figures from Brazil reinforce the tightening picture. The country’s Trade Ministry reported that unroasted exports in July dropped -20.4% year on year to 161,000 metric tons, while Cecafé, the exporters’ council, confirmed that green coffee exports fell -28% to 2.4 million bags. Within that total, arabica shipments declined -21% and robusta plunged nearly -49%. Overall, Brazil’s coffee exports in July fell to 2.7 million bags, and shipments for the first seven months of the year were down -21% to 22.2 million bags compared to the same period in 2024.
Another layer of support for prices comes from declining inventories on the Intercontinental Exchange (ICE). Arabica stocks dropped to a 1.25-year low of 726,661 bags last week before inching up slightly, while robusta inventories sank to a three-week low of 6,732 lots, still well below the two-year high reached in late July.
Even as supply pressures mount, Brazil’s harvest progress offers a short-term counterbalance. Cooxupé, the country’s largest cooperative and exporter, announced that its members had harvested 86.1% of their crop by August 15. Independent consultancy Safras & Mercado placed national progress at 94% complete, with nearly all robusta and more than 90% of arabica cherries already picked. This suggests that near-term supply will remain steady, though the longer-term outlook is clouded by weather concerns.
Globally, the International Coffee Organization (ICO) reported that exports in June rose +7.3% year on year to 11.69 million bags, though cumulative shipments for October through June were nearly flat at 104.14 million bags, down -0.2% compared to the previous year. Meanwhile, in Vietnam, the world’s largest robusta producer, production in 2023/24 fell -20% to 1.472 million metric tons, the smallest harvest in four years, due to severe drought. Exports for 2024 slipped -17.1% to 1.35 million metric tons, and the Vietnam Coffee and Cocoa Association has already cut its production forecast for 2024/25 to 26.5 million bags, down from an earlier estimate of 28 million. Yet, despite these challenges, Vietnam’s exports in the first seven months of 2025 rose +6.9% to 1.05 million metric tons, providing some temporary relief to the international market.
Looking ahead, projections from the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) suggest that world coffee production in 2025/26 will increase +2.5% year on year to a record 178.68 million bags. Arabica output is expected to fall -1.7% to 97.02 million bags, while robusta is forecast to rise +7.9% to 81.65 million bags. Brazil is projected to produce 65 million bags (+0.5%), and Vietnam is forecast to reach a four-year high of 31 million bags (+6.9%). Ending stocks are expected to climb by nearly +4.9% to 22.82 million bags. Still, major trader Volcafe has warned of a widening deficit in arabica, projecting a shortfall of -8.5 million bags for 2025/26, compared with -5.5 million bags this year. If accurate, this would mark the fifth consecutive year of arabica deficits, ensuring that upward pressure on prices will likely persist well into next year.
