Key takeaways
- Price and political volatility reshaped green coffee trade in 2025.
- Arabica prices peaked at US$4.41/lb, and still remain above the five-year average.
- Tariffs reduced US imports from Brazil by 46% in August alone, disrupting well-established supply chains.
- Improved global supply outlook suggests 2026 will be more stable, but key challenges remain.
The coffee industry has weathered many storms throughout its history, but 2025 was particularly turbulent. From unprecedented price volatility to sweeping tariffs and fundamental shifts in consumer preferences, coffee professionals across the supply chain faced challenges that reshaped the industry landscape more rapidly than ever.
Record coffee prices, in particular, quickly altered the longstanding dynamics of green coffee trade. Arabica futures surged to historic highs of US$4.41/lb in February 2025, driven by climate disruptions in Brazil and Vietnam and tight global inventories. Producers effectively became “price makers” rather than “price takers”, although the reality is more complex.
“On the surface, higher prices sound like good news for producers, but with rising costs and constant volatility, planning ahead or feeling secure can be challenging,” says Carly Green, the founder of independent marketing and education consultancy Carly Green Consulting. “This made close relationships with producers more important than ever.”
Although prices have since moderated, they remain above the five-year average, placing greater pressure on roasters and traders.
“Our buyers stood by us and supported us when the prices went down,” says Ashok Kuriyan, the Managing Director of India’s Balanoor Plantations in India. “We chose to support them when prices are higher. Our relationships with buyers are incredibly important.”
You may also like our article on why higher coffee prices don’t always mean higher quality.
Volatility is likely to continue into 2026, but with some relief
Looking ahead to 2026, easing global supply concerns and rising exports could provide the coffee industry with greater price relief.
The International Coffee Organisation’s latest report found that the ICO Composite Indicator Price (I-CIP) averaged 304.68 US cents/lb in December, down 7.8% from November. ICO data suggested that this decline was due to a more favourable global supply outlook for the 2025/26 harvest, particularly in Brazil, and tariff exemptions.
Conab recently reported that Brazilian arabica producers expect slightly higher production volumes in 2026, while conilion growers predict lower output. Vietnam, meanwhile, reported a record US$8.92bn in coffee export earnings in 2025, and estimates that 2025/26 harvest volumes will increase by 5-10% compared to the 2024/25 crop.
These figures suggest more stable arabica prices in 2026, but they’re still likely to remain higher than in previous years.
“Price volatility is common in agriculture, like with pepper, coffee, Areca, tea, etc.,” Ashok explains. “The market will find its equilibrium, but it will definitely be higher than the low prices seen in the past.”
For roasters and traders, this could further squeeze margins, especially as operational costs continue to rise. Producers, meanwhile, are likely to benefit from elevated yet stable prices.
Major challenges will persist
Ongoing political uncertainty, however, poses challenges for the entire supply chain in 2026. The Trump administration’s decision in April 2025 to impose sweeping tariffs on coffee-producing countries, including a steep 50% levy on Brazil, sent shockwaves through the industry.
As a result, Brazilian coffee exports to the US plummeted by 46% in August alone. Longstanding relationships between the two countries were tested, reshaping well-established global trade patterns.
“The businesses best equipped to face this situation are those with a diversified sourcing strategy across growing regions,” Carly says. “I’ve heard that some companies have explored rerouting and other complex shipping options, but there was no real workaround, and all of them added significant cost and complexity.”
Although coffee was eventually exempted from tariffs, the effects still linger. As a direct result of US tariffs, the International Monetary Fund expects global economic growth to slow to 3.1% in 2026, down 0.2% from its previous prediction a year ago.
Moreover, the Trump administration’s recent military operation in Venezuela has drawn criticism from Brazilian President Lula and Colombian President Petro, which could disrupt coffee trade between the countries. Threats to place tariffs on countries that sell oil to Cuba could also put coffee-producing countries, most notably Mexico, at risk.
Climate change looms as perhaps the most intractable challenge. Rising temperatures, erratic rainfall patterns, and extreme weather events are making coffee production increasingly difficult. Last year, Vietnam experienced severe flooding that disrupted drying and transport, while drought in Brazil reduced yields.
For producers, this means the challenges of 2025 extend beyond market volatility. Even when prices increase, the benefits must be channelled back into farm operations rather than being treated as pure profit.
“Any money we make is put back into the estate for various initiatives, such as replanting coffee trees and all the capital infrastructure and developmental work that we couldn’t do for the last six or seven years,” Ashok says.
The need to adapt continues
Even with signs of relief on the horizon, roasters, traders, and producers must remain agile and adaptable to navigate potential hurdles.
“For roasters, it means spreading risk across origins and keeping close ties with producers so both sides can manage volatility together,” Carly advises. “Buyers who have long-standing connections are in a stronger position to keep quality and consistency steady, while those relying on the spot market are feeling the strain.
“On the business side, while it’s much easier said than done, businesses must run lean while still investing in education and customer engagement, because those are the things that build loyalty and value over time,” she adds. “Financial sustainability requires discipline and efficiency, but businesses maintain their values by prioritising what they genuinely do well, rather than trying to compete with larger players on their terms.”
At origin, producers are implementing their own diversification strategies.
“Producers are increasingly becoming traders, selling green and roasted coffee,” Ashok explains. “It may not be because of high prices, though. The trend has been around for a while now; it may be the result of a changing coffee culture.”
The coffee industry was fundamentally reshaped by record prices and political disruption in 2025. This volatility will persist in 2026, although harvest estimates for major producing countries suggest it will be to a lesser extent.
Businesses that adapt will not only survive but lead. This entails diversifying sourcing and revenue streams, investing in supply chain relationships, meeting new consumer preferences, and building operational resilience.
Enjoyed this? Then read our article on how roasters can prepare for coffee price volatility.
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