The global coffee market is experiencing a significant decline in prices amid expectations of reduced demand and favorable weather conditions for harvesting in Brazil. According to analysts, global demand for coffee beans is expected to decrease by 0.5% in 2025, which has already affected the quotations.
This is reported by Finway
Reasons for the Price Decline
The price of Arabica coffee has reached its lowest level in the past seven months, dropping by 1.8% to $2.87 per pound. This is the lowest since November of last year. The price drop is primarily due to favorable dry weather in Brazil, which has allowed farmers to significantly accelerate the harvest. Meteorologists forecast another five days without precipitation, which will aid in the completion of the harvest, noted Vaisala meteorologist Brandon Fox.
The price decline also indicates a reduction in the weather risk premium in the market, as stated by Sucafina trader Ilya Bizov:
The price drop indicates a “significant reduction in the weather risk premium in the market”.
He also added that the situation could change if forecasts indicate a likelihood of cold weather, which could negatively impact future harvests.
Market Impact and Forecasts
Coffee futures have fallen by more than 31% compared to the peak values in February. This is linked to optimistic forecasts regarding production volumes in Brazil, which remains the largest coffee producer in the world. Initial results of the season show positive dynamics: yields are recovering, and the share of large beans exceeds last year’s figures.
Despite the decline in prices for raw coffee beans, retail prices for coffee remain high. This, according to Carlos Mera, head of the agricultural commodities group at Rabobank, will be the main reason for the reduction in global coffee demand in 2025.