Dynamic growth and challenges in the global coffee market
The global coffee market is poised for significant expansion as rising demand and changing consumer habits are giving the industry a new lease of life. At the same time, production is facing significant challenges, with climate change, pests and extreme weather threatening the very foundations of the supply chain. This combination of rising demand and uncertain supply has also driven up prices dramatically, with the price of arabica coffee reaching a 47-year high.
Arabica coffee futures recently hit an all-time high of $3.08 per pound, the last time it was seen in 1977. The price increase is driven primarily by Brazil’s poor crop outlook, but other issues in the global supply chain have also contributed.
Brazil, the world’s largest coffee producer, has suffered significant losses this season. The drought that began in April has severely affected the coffee flowering season, which is also negatively affecting the 2025/26 arabica crop outlook. The USDA Foreign Agricultural Service (FAS) has recently forecast that Brazil’s coffee harvest for 2024/25 will be just 66.4 million tons, down from the previous estimate of 69.9 million tons. This decline has also led to a significant reduction in coffee stocks: by the end of the 2024/25 season, stocks are estimated at just 1.2 million bags, down 26% from the previous season.
The coffee market’s difficulties are not limited to Brazil. In Costa Rica, heavy rains have caused severe damage, leading to a national state of emergency. The ICAFE coffee institute estimates that 15% of the annual coffee crop has been destroyed, further reducing global supply.
While production is struggling, demand for coffee is growing worldwide, partly due to changing consumer habits. The increasing popularity of specialty coffees and the rise of coffee consumption at home are also adding to the pressure on the supply side. The imbalance between supply and demand is expected to continue to push prices higher.
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