The global coffee market enters the second half of 2025 riding a wave of unprecedented price volatility and bullish sentiment. Tight global inventories, sharp production swings driven by adverse weather in major producing nations, and evolving consumer demand are all shaping the outlook. Against the backdrop of historic price rallies—Robusta futures on ICE Europe above $4,300/ton (+5.6% weekly) and Arabica on ICE NY at $2.24/lb (+3.2%)—stakeholders face both challenge and opportunity.
Two powerful forces are currently at play: On one side, Vietnam—the world’s largest Robusta producer—witnesses a dual trend of lower export volumes but explosive price and value growth, signaling how supply constraints are supercharging fundamental pricing. On the other, India’s domestic market may see a welcome boost from the recent Goods and Services Tax (GST) reduction from 18% to 5%, set to make coffee more affordable for Indian households and support inclusive growth on the farm and in FMCG. Yet, production threats persist in India itself, where poor pre-monsoon rains have forced the USDA to trim output forecasts. Meanwhile, Europe and the US increase imports, seeking security amid tightening supply.
As coffee’s role expands from global breakfast staple to premium cultural symbol—especially in emerging markets—consumers and traders alike should prepare for continued volatility, elevated price risk, and rapid shifts in trade and consumption patterns.
📈 Prices: Latest Exchange Data
| Exchange | Contract | Closing Price | Weekly Change | Market Sentiment |
|---|---|---|---|---|
| ICE NY (Arabica) | July 2025 | USD 2.24/lb | +3.2% | Bullish |
| ICE Europe (Robusta) | July 2025 | USD 4,370/ton | +5.6% | Strongly Bullish |
| Hanoi (Physical, Robusta) | Spot | USD 5,650/ton | +4.8% | Bullish |
| London ICE | Robusta (July 2025) | 5,291 USD/ton | +3.2% | Bullish |
| New York ICE | Arabica (July 2025) | 8,560 USD/ton | +2.7% | Bullish |
| Vietnam (Central Highlands) | Robusta (Spot) | ~5,100 USD/ton | +4.1% | Very Bullish |
🌍 Supply & Demand Drivers
- 🇻🇳 Vietnam: Jan–Apr 2025 exports down 10% y/y (663,000 tons), but value up 51% to $3.8bn; higher prices offset falling volume. Average export price now $5,698/ton (+67.5% y/y).
- 🇧🇷 Brazil: April 2025 green coffee exports down 31.9% y/y, tightening global supply; upcoming harvests closely watched for weather impacts.
- 🇮🇳 India: 2024–25 production forecast cut to 6 million bags, exports expected at 4.2 million bags (slight y/y decline), largely due to poor pre-monsoon rainfall.
GST on coffee dropped to 5%, expected to spur domestic demand and investment in retail portfolios.
Domestic consumption rising but still modest at ~1.4 million bags vs ~6 million bags produced. - Europe/US: Imports from Vietnam and India continue to rise as buyers diversify away from Brazil amid weather risk.
📊 Fundamentals & Speculative Positioning
- Speculative funds remain net long on ICE coffee contracts amid ongoing supply worries.
- Global inventories at multi-year lows; certified robusta stocks down in London, arabica stocks growing in NY, showing divergent regional supply trends.
- Recent tax reforms (India GST) expected to boost long-term domestic consumption, while trade policy shifts (US tariffs on India) may alter major export flows.
⛅ Weather Outlook: Key Growing Regions
- 🇧🇷 Brazil: Forecasts show predominantly dry weather, risking crop stress and yield loss, although isolated showers may favor late flowering. High volatility expected around harvest period.
- 🇻🇳 Vietnam: Adequate rainfall in June 2025 has supported robusta crop health, but earlier dry spells and logistics crunch remain downside risks for future output.
- 🇮🇳 India: Monsoon rainfall deficits in Kodagu (-51%), Chikkamagaluru (-40%), and Wayanad (-58%) have hit arabica yields especially hard. Robusta output steady but risk persists if dry spell continues.
IMD forecasts point to ongoing rainfall deficiencies which may curb 2025/26 output potential.
🌎 Global Production & Stocks
| Country | 2024/25 Prod. (mn 60kg bags) | 2024/25 Exports (mn bags) | YoY Change |
|---|---|---|---|
| Brazil | 69.9 | 39.6 | +5% |
| Vietnam | 27.5* | 14.9* | -2% (prod.), -10% (exp.) |
| Colombia | 12.5 | 10.8 | Flat |
| India | 6.0 | 4.2 | -2% (prod.), -1% (exp.) |
| Indonesia | 9.8 | 5.3 | +10% (rebound) |
*Projected; Vietnam production/export numbers continue to be revised with ongoing weather impacts.
📌 Market Drivers & Domestic Developments (India)
- GST reduction from 18% to 5% expected to boost Indian consumption, support FMCG and GDP growth, and ensure affordability for all classes of consumers.
- Industry stakeholders expect higher investment in branding, product development, and retail expansion.
- Ongoing urban café culture and youth-driven demand for premium blends are supporting long-term market expansion in India.
💡 Trading Outlook & Recommendations
- Producers: Benefit from current price highs; consider forward contracts but remain alert to weather volatility and policy changes.
- Buyers: Secure short-term requirements; consider staggered buying as volatility is likely to stay high in Q3/Q4 2025.
- Exporters/Importers: Watch for further trade policy changes especially in the US/EU; India’s GST cut could make the market more dynamic for value-added products.
- Speculators: Bullish bias remains but watch for macro risk (US dollar, emerging markets FX volatility, potential for fund profit-taking).
📆 3-Day Regional Price Forecast
| Exchange | Product | Current Price | 3-Day Forecast | Sentiment |
|---|---|---|---|---|
| ICE NY | Arabica (July 2025) | USD 2.24/lb | USD 2.20–2.28/lb | Bullish |
| ICE Europe | Robusta (July 2025) | USD 4,370/ton | USD 4,350–4,500/ton | Strongly Bullish |
| Hanoi (Physical, Robusta) | Spot | USD 5,650/ton | USD 5,630–5,720/ton | Bullish |
| London ICE | Robusta (July 2025) | USD 5,291/ton | USD 5,250–5,350/ton | Bullish |
| India | Premium Roast & Ground | USD 12/kg | USD 12–12.5/kg | Stable to Bullish |
