How Coffee Production by Country Shapes Today's Prices

Coffee bean prices have climbed more than 80 percent this year, and JDE Peet's plans to raise prices in Brazil by an average of 30 percent early next year, with European roasters expected to follow. Drought in Brazil and Vietnam cut harvest prospects in key coffee production by country markets, tightening supply and pushing futures to record highs before a recent pullback.

Futures dipped 2.65 percent after the Federal Reserve cut rates by 25 basis points to 4.35-4.50 percent, the third cut since September. Higher ICE-monitored arabica coffee producing countries' inventories and strong exports also eased prices, yet values stay elevated, and possible La Niña conditions keep 2025/26 supply gap concerns alive.

Recently, affected by extreme weather, global coffee bean prices have continued to rise, with cumulative gains exceeding 80% this year. As the world's second-largest coffee-consuming country, Brazil has seen its domestic roasters announce significant price increases one after another, and JDE Peet's, one of the world's largest coffee companies, plans to raise prices in the Brazilian market by an average of 30% early next year. At the same time, European roasters are also preparing to follow suit. Although the Federal Reserve's rate cut caused coffee futures to briefly pull back, persistently high prices, an uncertain production outlook, and the possible emergence of La Niña have all intensified concerns about a global coffee supply gap in 2025/26. This article will sort out the multiple factors behind the price increases and the market's future trends, providing coffee lovers with the latest origin news.

According to media reports, because severe weather conditions have driven up coffee bean prices and affected the global coffee market, including Brazil's domestic consumer market, major Brazilian coffee roasters, including JDE Peet's, one of the world's largest coffee companies, are expected to raise prices in the domestic market starting early next year.

It is understood that the main reason is that global coffee prices have risen severely recently, having earlier hit a record high, with cumulative gains of more than 80% this year. The primary cause is that both Brazil and Vietnam suffered severe drought this year, affecting coffee crop growth and harvest prospects. This situation has also led to continuous rises in coffee futures in recent days, although they fell 2.65% recently.

It is understood that the main reason for this decline in coffee futures is that the Federal Reserve announced a rate cut. This cut was 25 basis points, bringing rates to between 4.35% and 4.50%, and it is expected that the pace of rate cuts in 2025 may narrow to 50 basis points. This is already the Fed's third rate cut since September this year.

Due to speculators' behavior and changes in monetary policy, combined with recent reports from multiple countries of strong exports and increased supply, ICE-monitored arabica and robusta coffee inventories climbed, all of which caused coffee futures prices to fall.

Although futures prices fell, they remain at high levels, which has pushed up domestic coffee consumption prices in Brazil. According to traders, JDE Peet's will raise prices in Brazil by an average of 30% next year. The company manufactures multiple coffee brands in Brazil and is mainly raising prices for roasted and ground coffee, green coffee beans, instant coffee, capsules, and cappuccino. Germany's Melitta also said it is facing the problem of rising coffee costs, having already raised prices by 12% recently, with prices rising another 25% this month.

In addition, according to reports, some European coffee traders say that some large European roasters have already planned 10% increases at the end of December or early January. By the end of March next year, consumers will clearly feel the price increases and may ultimately respond by reducing consumption.

Brazil is the world's second-largest coffee-consuming country, after the United States. Therefore, some experts say that because of rising domestic coffee prices in Brazil, coffee companies may choose to import from other coffee-producing countries to supply the Brazilian market, but at the same time this will push up prices in other countries' markets.

At present, the market still believes that Brazil's future coffee production is unclear, all because Brazil's severe weather has continued to fluctuate recently. According to reports, although rainfall has resumed in Minas Gerais, Brazil's main coffee-producing state, last week's rainfall was 35.2 millimeters, only 65% of the historical level, and temperatures were high, with average temperatures for the entire month of December reaching above 30°C and maximum temperatures reaching 36°C. This situation is not favorable for coffee fruiting. If fruiting conditions are poor, it will cause coffee production in the new season to decline again.

Moreover, the climate outlook for the future is also far from ideal, because earlier the World Meteorological Organization said the probability of La Niña occurring in the next three months exceeds 50%. This has caused market concerns. At present, both Brazil's domestic market and the international market are generally pessimistic about Brazil's coffee production in the new season next year. Earlier, several well-known coffee trading companies released forecasts for Brazilian coffee, all predicting lower output, and believed that global coffee demand will continue to increase. In 2025/26, the global coffee market will see a supply gap for the fifth consecutive year, with an expected shortage of 8.5 million bags.

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The above content is compiled by CoffeeHunters, a coffee news website.