Translated from: Futures Daily
In 2024 and 2025, coffee prices experienced two significant upward trends. Since 2026, due to the expected increase in production by major producing countries, coffee prices have experienced a temporary decline. However, geopolitical risks such as the Middle East conflict still exist, and factors such as rising shipping costs and fuel and fertilizer prices continue to push up the costs of various links in the coffee industry chain. The uncertainty of coffee price trends has not been eliminated.
Global coffee ending inventory drops to lowest level in years
As a tropical economic crop, coffee's commercial cultivation is strictly limited to the "coffee belt" between latitude 25 ° N and latitude 30 ° S. This area has no frost all year round, abundant precipitation, and ample sunshine. The average annual temperature is maintained at about 20 ℃, which determines the spatial distribution of global coffee producing areas from the perspectives of climate and natural endowment. The combined production of seven major producing countries, including Brazil, Vietnam, Colombia, Ethiopia, Indonesia, Uganda, and India, typically accounts for over 80% of the global total production.
According to a report released by the U.S. Department of Agriculture's (USDA) Foreign Agricultural Service in December 2025, the global coffee market showed a rare pattern of record high production and continuous inventory decline in 2025/2026. The global coffee production for this year is expected to reach a record high of 178.848 million bags (60 kilograms per bag), an increase of 3.5 million bags or approximately 2% compared to the previous year. The main driving factors for the increase in production are the gradual recovery of production in Vietnam and the record breaking production in Indonesia and Ethiopia. However, the above increase can only partially offset the production cuts caused by unfavorable production conditions in Brazil and Colombia.
From the perspective of variety structure, Arabica coffee and Robusta coffee show significant differentiation. According to USDA data, global Arabica coffee production is expected to reach 95.515 million bags in 2025/26, a year-on-year decrease of approximately 4.7%; Robusta coffee production is expected to reach 83.333 million bags, a year-on-year increase of 10.9%. This differentiation pattern is a direct reflection of weather differences in major producing countries – drought in the Arabica coffee producing region of Brazil has led to a sharp decline in production, while Robusta coffee in Vietnam and Indonesia has experienced a wave of increased production under favorable weather and high price stimulation.
At the same time, the USDA expects global coffee consumption to continue its growth trend in 2025/2026, reaching a record high of 173.852 million bags, a year-on-year increase of 1.3%. The global export volume of coffee beans is expected to be 123.825 million bags, an increase of 2.3 million bags from the previous year and a year-on-year growth of 1.9%. The main contributors to export growth are Vietnam, Indonesia, and Honduras, and the increase in these three countries is sufficient to offset the drag caused by the decline in exports from Brazil and Colombia.
The most crucial thing is that global coffee ending inventory is expected to decline for the fifth consecutive year, leaving only 20.148 million bags, the lowest level in many years. The core contradiction in the market has shifted from whether production is sufficient to whether effective supply is available. Even if the total production reaches a new high, the reduction in production by major producing countries leads to a decrease in exportable supply, coupled with the extremely limited buffer space provided by low inventory, making the market extremely sensitive to any potential supply risks.
Severe price fluctuations
As one of the most widely circulated agricultural products in the world, coffee's price discovery and risk management mainly rely on the international futures market. At present, the two core international coffee futures varieties are ICE New York Arabica Coffee Futures and ICE London Robusta Coffee Futures.
In 2024 and 2025, global coffee prices will experience significant fluctuations. Driven by extreme weather, supply disruptions, and low inventory patterns, coffee prices have risen to historic highs, breaking out of two significant upward trends.
ICE New York Arabica coffee futures prices surged above $4.3 per pound twice in February and October 2025, setting a rare high in decades. Since 2026, prices have significantly declined. Rabobank predicts that ICE New York Arabica coffee futures prices will fall within the range of $2.5-3.0 per pound by the end of 2026, but it is expected that the futures spread structure will shift from near month premiums to far month premiums only after a larger volume of coffee is listed in Brazil's new production season in December 2026.
Robusta coffee prices have also experienced significant fluctuations in the market. According to data from the International Coffee Organization, the price of Robusta coffee reached a historical peak of $5.812 per kilogram in March 2025 and has since fluctuated and declined. In March 2026, Robusta coffee prices dropped to $3.897/kg, a decrease of 31.51% compared to the same period last year. Recently, Robusta coffee prices have come under further pressure, with ICE London Robusta coffee futures prices experiencing a sharp drop of over 3% on some trading days.
According to World Bank data, the price of Arabica coffee in March 2026 was approximately $7.08 per kilogram, a year-on-year decrease of 22% and a month on month decrease of 12%; The price of Robusta coffee is about $3.96 per kilogram, a year-on-year decrease of 32% and a month on month decrease of 7%.
There is a certain degree of differentiation in the price performance of the two major coffee varieties, which is due to the deep differences in supply and demand fundamentals:
Arabica coffee supply is experiencing structural tightening. The severe drought in the main production area of Arabica coffee in Brazil was the core driving force behind the previous price increase. Rabobank estimates that Brazil's total coffee production from July 2025 to June 2026 will be approximately 62.8 million bags, a decrease of 6.8% compared to July 2024 to June 2025. Multiple institutions predict that the reduction in Arabica coffee production in Brazil may be as high as 16%. The significant reduction in Arabica coffee production has led to a supply gap in the global specialty coffee market that relies on Brazilian Arabica coffee.
Robusta coffee production is expected to increase significantly. In sharp contrast to the tight supply of Arabica coffee, Robusta coffee production in Vietnam and Indonesia has recovered. StoneX predicts that the global coffee market will enter a state of oversupply by 2026, with an excess of approximately 10 million bags, the largest surplus scale in six years.
Overall, the global coffee market in 2025/2026 exhibits the following core characteristics:
Firstly, the overall supply tends to be loose, but structural tension still exists. The total global coffee production has reached a new high, but the growth is mainly driven by Robusta coffee, while Arabica coffee supply continues to tighten due to drought in Brazil. This means that the global premium coffee market still faces a supply gap, and Robusta coffee prices may enter an adjustment cycle under the influence of medium – to long-term production expectations.
Secondly, global inventory is at a historical low and buffering capacity is extremely limited. The global coffee ending inventory to consumption ratio is still at a low level, and low inventory itself is becoming an important amplifier of price fluctuations.
Thirdly, the normalization of climate risks highlights the vulnerability of the supply chain. In the past 50 years, the highest temperature in major global production areas has risen by 1.3 ℃ to 1.6 ℃, and rainfall has decreased by 93-211 millimeters, making Arabica coffee more susceptible to disturbances during flowering and fruiting periods. The frequent occurrence of extreme weather is evolving from sporadic disturbances to systemic risks, and the impact elasticity of climate factors on production is significantly increasing.
Fourthly, geopolitical events and logistics costs continue to exert pressure. Geopolitical events such as the Middle East conflict have led to an increase in shipping costs, coupled with logistics bottlenecks such as port congestion and container shortages, which are driving up the actual landed costs of global coffee from the trade side.
Fifth, sustainable development regulation reshapes the trade landscape. The EU Zero Deforestation Act (EUDR) and other green trade rules are forming new compliance requirements for coffee exports. Vietnam has been listed as a "low-risk" EUDR country by the European Union, with only 1% of the sampled goods, providing it with a significant competitive advantage. However, maintaining this advantage requires producers and exporters to maintain self-discipline and fully comply with international standards.
Looking ahead, the global coffee market is at a historic turning point. On the one hand, Brazil is expected to increase production of Robusta and Arabica coffee in 2026/2027, which will alleviate the pressure of supply shortages. StoneX predicts that Brazil's coffee production in 2026/2027 will reach a record high of 75.3 million bags. On the other hand, rebuilding global inventory requires time. Under the low inventory pattern, any weather or logistics disturbance may trigger a new round of significant price fluctuations.
For downstream enterprises in the coffee industry chain, actively utilizing the futures market for risk management in the context of increased weather volatility, complex geopolitical situations, and stricter sustainable development regulations can help enhance operational resilience. (Author affiliation: Guangzhou Futures)
Editor: Wu Zhengsi