Coffee Market on Edge: Tariffs, Brazilian Competition, and Weather Shape 2024/25 Outlook

The global coffee market stands at a turning point as 2024 transitions into 2025, driven by a maelstrom of shifting trade flows, volatile weather, policy changes, and fierce competition among major producers. Indian coffee exporters are sounding the alarm over a potential influx of discounted Brazilian beans into Europe—a direct result of Brazil redirecting coffee originally bound for the US, now subject to punitive tariffs. Such a move could cut deeply into India’s hard-won market share, especially in premium washed arabicas and robustas, where Indian beans have long commanded a price premium.

Recent years have seen elevated prices due to supply shocks in both Brazil and Vietnam, and while global production is recovering, India faces its own headwinds from disappointing pre-monsoon rains and tighter inventories. Europe remains the anchor market for Indian coffee, but cost-sensitive roasters and the threat of cheaper Brazilian robusta imports mean Indian exporters and producers must brace for greater competition and pricing pressure. Meanwhile, the global macro environment is adding to the complexities: a strong US dollar, speculative activity, and a patchwork of weather across key growing regions keep traders, roasters, and growers on edge. Here’s a structured analysis of the current coffee market landscape.

📈 Prices

Exchange / Product	Latest Price	Weekly Change	Market Sentiment
ICE US Arabica (Jul 2024)	194.80 US¢/lb (≈182.70 EUR¢/lb)	-2.1%	Neutral/Bearish
London ICE Robusta (Jul 2024)	4,030 USD/t (≈3,775 EUR/t)	-3.6%	Bearish
ICO Composite	335.76 US¢/lb (≈314.90 EUR¢/lb)	-3.5%	Neutral/Bearish
India Arabica Parchment	6.60 USD/kg (≈6.20 EUR/kg)	Stable	Firm
India Robusta Parchment	5.67 USD/kg (≈5.33 EUR/kg)	Stable	Under Pressure

*Exchange rates as of July 2024: 1 USD ≈ 0.936 EUR

🌍 Supply & Demand

• Brazil’s massive 2024/25 harvest (arabica: 48.2M bags, robusta: 21.7M bags) is expected to increase global supplies, with robusta witnessing the sharpest growth till 2025 (Rabobank: 24.7M bags in 2025).
• India’s production is forecast to decline slightly to 6M bags (arabica: 1.4M, robusta: 4.6M) due to poor pre-monsoon rainfall, mainly affecting arabica yields. Bean exports seen slipping to 4.2M bags from 4.25M last year.
• Vietnam—world’s largest robusta producer—holds output steady at ~29M bags; Indonesia rebounds sharply (+2.8M bags to 10.9M) driven by good weather.
• Europe, India’s top buyer, faces risk of margin-driven switching to cheaper Brazilian robusta, especially as processors seek to contain inflation and comply with new EU sustainability rules.

📊 Fundamentals

• Tariff Shocks: New US tariffs on Brazilian coffee are diverting Brazil’s exports from the US to Europe, threatening India’s core market share.
• Robusta Pressure: Indian robusta holds a premium over London prices but faces imminent price erosion due to Brazilian supply push.
• Low Inventories: Indian exporters report unusually tight stocks (10,000t vs typical 15,000–20,000t), adding fuel to price volatility.
• Global Demand: Coffee consumption continues to grow, with emerging markets contributing significantly.
• Speculative Positioning: Recent retreat in fund buying, but commodity funds remain net long amidst macro volatility.

⛅ Weather Outlook

• Brazil: Recent dryness in cerrado/MG region has stressed some late-flowering beans, but overall rainfall outlook is positive; risk of fungal diseases present.
• Vietnam: Adequate rainfall conducive for robusta recovery, but El Niño lingering in Southeast Asia could reduce late-season rainfall.
• India: Serious rainfall deficits in key coffee states (Kodagu: -51%, Chikkamagaluru: -40%, Wayanad: -58%), limiting size and quality of current crop and raising concerns for next flush if monsoon does not rebound soon.

🌐 Global Production & Stocks

Country	2024/25 Forecast (Mn 60-kg bags)	Year-on-Year
Brazil	69.9	+3.6M
Vietnam	29.0	Flat
Colombia	12.4	+0.2M
Indonesia	10.9	+2.8M
India	6.0	-0.1M
World	176.2	+7.1M

📌 Market Drivers

• USDA and Rabobank: World production up by 7M+ bags; robusta is driving growth.
• European buyers fast-tracking Indian shipments pre-EU deforestation deadline, but now face alternatives from Brazil.
• Speculative funds, macro headwinds, and currency (strong USD) influencing direction.
• Low Indian inventories heighten volatility and export uncertainty.

💡 Trading Outlook & Recommendations

• Producers in India: Consider forward selling amid high prices before Brazilian robusta swamps the market.
• Exporters: Anticipate increased price pressure in Europe; prepare for aggressive competition, particularly for robusta grades.
• Buyers (roasters): Use current price dip for strategic cover; watch for further softening if Brazil’s harvest accelerates and robusta glut materializes.
• Traders: Monitor speculative activity and weather developments in Brazil and Vietnam; positioning near support is key.
• All: Track developments around US tariffs, EU regulations, and weather in SE Asia for near-term price volatility.

📆 3-Day Regional Price Forecast

Exchange/Product	Day 1	Day 2	Day 3
ICE Arabica (Jul 2024, New York)	193–196 US¢/lb	192–195 US¢/lb	194–197 US¢/lb
London ICE Robusta (Jul 2024)	4,010–4,050 USD/t	4,000–4,030 USD/t	4,010–4,070 USD/t
India Arabica Parchment	6.15–6.25 EUR/kg	6.15–6.20 EUR/kg	6.15–6.30 EUR/kg
India Robusta Parchment	5.25–5.35 EUR/kg	5.25–5.30 EUR/kg	5.25–5.40 EUR/kg

Prices are expected to remain choppy within a narrow range, with downside risk in robusta if Brazilian flows to Europe accelerate. Watch for inter-day volatility around macroeconomic releases and any tariff/harvest headlines.