Webinar Recap: The Great Coffee Price Breakaway
Key Takeaways
· Extreme weather is driving historic global coffee price volatility
· Tariffs are reshaping trade routes and market behavior
· Investment funds and market inversion are shifting profit centers
Brewing Uncertainty
In a recent webinar hosted by StoneX, Albert Scalla, StoneX Vice President of Trading, went in-depth on the major factors impacting the prices of the global coffee trade market.
In an unsettled global market, coffee prices are being stirred by a potent mix of climate disruption, geopolitical tension, and economic policy. Over the past five years, the coffee trade has faced unprecedented challenges. Scalla noted that pandemic-induced supply chain chaos, inflation spikes, and now aggressive tariffs under President Trump have produced uncommon volatility.
Weather the Storm
At the heart of the price surge is extreme weather, particularly in Brazil, Vietnam, and Indonesia. Droughts, frosts, and temperature swings have slashed yields, pushing Arabica prices to a historic high of $4.40/lb, surpassing the previous record set in 1975[NO1] . Robusta prices followed suit, driven by heatwaves and dry spells in Southeast Asia. These climatic events, compounded by the transition from La Niña to El Niño, have created a perfect storm for commodity markets.
Tariffs Produce Additional Complications
Adding to the turmoil are tariffs targeting key coffee-producing nations. Brazil, India, and Indonesia have faced levies as high as 50%, disrupting trade flows and prompting tariff arbitrage. As a result, coffee is rerouted through lower-tariff countries like Colombia, which has led to contraband concerns and a need for roasters to sharpen their cupping skills to detect origin mislabeling.
The Markets Respond Accordingly and Painfully
Meanwhile, market inversion—where spot prices exceed future prices—has created financial strain for importers and exporters. Holding inventory now means losses, and high interest rates and freight costs only deepen the wounds. Yet, producers and speculators are benefiting, with investment funds capitalizing on bullish trends and inverted spreads.
Despite fears of “consumption destruction,” demand remains resilient, though high-end coffee sales are softening. Brazil, the second-largest consumer, has seen inflation hit 80% for roasted coffee, while U.S. and European consumers face 40% and 20% hikes respectively.
How to Steady the Course
Looking ahead, the market’s fate hinges on rainfall in Brazil over the next few weeks. Adequate precipitation could stabilize yields and ease prices. But if drought persists and tariffs intensify, coffee could surge past $4.50/lb again. For stakeholders across the supply chain, using all the resources available for staying informed is now essential to navigating this high-stakes brew.
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Watch the full webinar here.
Password: GCPB1003
--- Written by Alex Mednick
--- Expert: Albert Scalla, StoneX Senior VP of Trading for Coffee, Cocoa, and Palm Oil
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