Coffee Prices Drop as Supply Recovers After Climate Setbacks
After facing low harvests and high prices in the spring of 2025, coffee prices are dramatically decreasing.
As a result, ripples are being seen throughout the global supply chain following a period of unpredictable crop yields and unstable consumer prices.
Production is predicted to increase over the next three years, easing concerns for farmers and investors and promising rapid price drops of Arabica and Robusta coffee beans.
If this trend continues, it could result in a return of more products to the shelves and lower prices for consumers.
The impact of climate on production
Arabica coffee, which once hit US$4.30 per pound in February 2025, is now priced at US$2.80.
Meanwhile, Robusta fell from US$2.75 in February 2025 to US$1.73 per pound.
Smallholder farmers relying on price and harvest stability find themselves hardest hit by this change, with retailers also feeling the effects.
Brazil's situation is particularly challenging, with 110,000 wildfires burning 114,000kmÂČ between January and August 2024, accompanied by significant flooding in June.
Climate change impacts global agriculture, prohibiting crops from realising their full potential and, ss weather patterns grow increasingly unpredictable, yields suffer and production decelerates.
The reduction in coffee output can largely be attributed to these ongoing climate issues and is expected to continue if destabilised weather persists.
The International Coffee Organisation (ICO) Executive Director, Vanusia Nogueira comments: "I think (the end of the deficits) will depend a lot on this climate issue."
Severe weather conditions impact global coffee suppliers, lowering crop yield and hiking prices. Vietnam, the chief producer of Robusta, illustrates this with its own experience.
The nation had a drought during the 2023/24 crop year, creating the smallest crop in four years and a 20% drop to 1.472 MMT (million metric tonnes).
Ongoing uncertainty in production
Ongoing deficits plague Vietnam, despite these production challenges.
The Vietnam Coffee and Cocoa Association now forecasts a 2024/25 harvest of 26.5 million bags of coffee, down from a previous estimate of 28 million.
Supply disruptions also manifest at the retail level, such as Nescafé's supply problems with its Frothy Coffee range.
Nescafé said "unforeseen circumstances" were causing stock issues across the whole range, with a spokesperson noting: "We are sorry to say that we are facing a short-term disruption to the production of our Nescafé frothy coffee range.
"We're working hard to get consumers' favourite products back on shelves as quickly as possible. We currently expect to be back to full availability from the beginning of August, although you should start to see some of the range, including Cappuccino, back on shelves sooner."
Planning for a stable future
Despite these uncertainties, there is global anticipation for increased coffee supply in the coming three years.
The United States Department of Agriculture (USDA) estimates a return to surplus, expecting Vietnam's robusta production to hit 30 million bags in the 2025/26 crop year, a four-year peak.
New coffee plantations are emerging in Brazil, targeting supply needs pressures over the next few years.
"These are plantations that will start producing in about three years, so then, in three years, we should have some additional supply,” adds Vanusia.
The USDA turns to Brazil, forecasting a coffee increase to 65 million bags within the 2025/26 period, with Vietnam's supply jumping to 31 million bags.
This shift should drive a subsequent price drop across the supply chain, smoothing out production to expected levels and stabilising prices.
For those in the supply chain, a steadier and more predictable income should follow. With the establishment of new plantations and plans to satisfy coffee production forecasts, greater stability looms for supply chains.