Coffee Market Commentary: August 25th, 2025

What an adventurous ride.

July started off with a bang when, on July 9th, US President Trump announced a 50% tariff on all U.S. imports originating from Brazil, an increase from the current 10%. Brazil is the origin of around 25% of US coffee imports, and a 50% tariff is a major disadvantage for the product, bringing uncertainties about the flow of the Brazilian production. Colombia, the second supplier to the United States (with 20% of the US imports), has a 10% tariff, while Vietnam, a major robusta exporter, has a 20% tariff.

The imposition of tariffs would significantly reduce the competitiveness of Brazilian coffee in the U.S. market, hindering the product's access to the country and putting pressure on export chain margins.

Undoubtedly, the U.S. coffee industry and American consumers will feel the impact. In 2024, Brazil exported 8.13 million bags of coffee to the U.S., representing more than 16% of Brazil's total coffee exports for the year, according to data from Cecafé (Brazilian Coffee Exporters Council). Since 2024, global coffee prices have seen sharp increases, driven mainly by climate issues affecting production. This has led to rising consumer prices in the U.S. as well.

Data from the U.S. Bureau of Labor Statistics (BLS) show that the 12-month accumulated inflation for roasted and ground coffee reached 32.4% as of May 2025, already putting pressure on consumption in the country. The implementation of these tariffs is likely to further intensify consumer-level inflation.

Numerous organizations and companies have asked for exemption of coffee, but this has not been granted.

As if all of that wasn’t enough excitement for the market, and if that didn’t trigger enough uncertainties, the end of the month brought forecasts of dropping temperatures for Brazil’s coffee belt. And the chats started going crazy. Reports ranged from no damage to catastrophic damage and everything in between. We had to send our own boots on the ground to assess.

Fortunately, at the time of the frost event, approximately 96.3% of the 2025 crop had been harvested, according to our own data, so those yields were spared of any impact.

We have confirmed that some regions, mainly in the Cerrado Mineiro, were impacted by the occurrence of frost that had not been adequately anticipated by predictive climate models, whether American, European, or those used in Brazil, such as those of the National Institute for Space Research (INPE) and INMET. For Patrocínio, the most affected area, forecasts indicated minimum temperatures between 7 and 8 degrees Celsius on the 11th. However, despite not being forecast, frost did occur, negatively affecting the development of coffee plantations and reducing the productive potential of the 2026/27 crop. 

StoneX estimates that frost losses in the Cerrado Mineiro amount to 424,000, equivalent to 3.86% of the region’s total area.

While not as extreme as the 2021 frost event, this was still impactful nonetheless.

Generally, temperatures begin warming in August, so the threat of frost should be less through the rest of August. The market will now need to pay close attention to the flowering of the 2026 crop, which should reveal more about the condition of the crop.