Global Coffee Prices Slip as Markets Brace for Economic and Geopolitical Turbulence

ICO Report Reveals High Volatility, Rising Tariffs, and Regional Export Shifts Impacting the Industry

Global coffee prices saw a slight retreat in March 2025, signaling a shift in market momentum after months of elevated price levels. The International Coffee Organization (ICO), in its latest monthly report, confirmed that the industry is entering a phase of increased uncertainty—driven by economic concerns, production surges, and new trade barriers.

The ICO Composite Indicator Price (I-CIP) averaged 347.85 US cents/lb, down 1.8% from February. While still significantly higher than a year ago—up 86.6% compared to March 2024—the price drop marks the fourth short-term downturn since early 2024. Market volatility also climbed sharply, with intra-day fluctuations averaging 12.3%, underscoring growing nervousness among traders.

Economic Pressures Deepen

The report points to global macroeconomic challenges as key drivers of the price drop. Consumer confidence in the United States has declined to a 12-year low, while major central banks—including the U.S. Federal Reserve and Bank of England—have paused rate cuts amid economic uncertainty.

Additionally, U.S. authorities have triggered a new wave of reciprocal tariffs on coffee imports from dozens of exporting countries. Nations such as Vietnam, Indonesia, Colombia, and India now face duties of up to 47%, a move expected to disrupt trade flows and inflate retail prices in the U.S. and beyond.

Supply Up, Stocks Down

On the supply side, the market saw a strong rebound in production. Colombia recorded a 29-year high in coffee output in February, while global green coffee exports rose 6.6% year-on-year. Robusta exports grew 10.7%, largely due to sharp recoveries in Indonesia and Vietnam.

Despite these figures, inventories remain tight. Consumer stocks in importing countries fell to 15.9 million bags, their lowest since the last major drawdown, raising concerns about long-term availability. Meanwhile, certified Arabica stocks dropped 4.6% month-over-month, even as Robusta stocks in London edged higher.

Regional Trade Dynamics Shift

The report reveals shifting momentum in global export trends:

• Asia & Oceania surged ahead with a 21.7% rise in exports, led by Vietnam’s renewed shipments and Indonesia’s robust recovery.

• Africa posted 20.6% growth, thanks to strong performances from Ethiopia and Uganda.

• South America, however, saw exports fall 6.9%, largely due to reduced volumes from Brazil.

• Mexico and Central America posted a 10.6% increase, but Mexico’s green coffee shipments fell as the country continues to shift toward soluble coffee production.

Arabica Leads, Robusta Rises

Arabicas maintained dominance in the export market, representing 63.6% of green coffee exports during the first five months of the coffee year. Yet, Robustas are steadily gaining ground, driven by strong demand and favorable production cycles in Southeast Asia.

Price differentials between Arabicas and Robustas remain wide. The arbitrage between the New York and London futures markets reached 135.11 US cents/lb, its highest in over three years, reflecting market divergence between the two major varieties.

Outlook: Stability at Risk

While the ICO projects a global coffee surplus of 1 million bags for the 2023/24 season, this balance is fragile. Concerns over Brazil’s 2025/26 crop, ongoing logistical disruptions in the Red Sea, and rising geopolitical tensions suggest that the market could face renewed pressure in the coming months.

The report concludes that although prices remain historically high, the coffee sector is now caught in a tug-of-war between improving supply and softening demand. Industry stakeholders should brace for a period of continued market volatility, policy uncertainty, and climate-related risks.