Coffee Market 2025: Widening Premiums, Shifting Supply Chains & Global Volatility

The global coffee market stands at a pivotal crossroads in mid-2025, marked by widening export premiums, a competitive shake-up among origins, and persistent volatility stemming from weather uncertainties and new trade policies. Indian coffee exporters, once beneficiaries of robust European and Middle Eastern demand, are now grappling with fierce competition from Uganda and Ethiopia. Soaring premiums for Indian robusta—now reaching up to $1,300/tonne above London’s LIFFE benchmark—have notably reduced India’s competitiveness. As price differentials grow from $100–200 to $300–400/tonne between Indian and Ugandan varieties, European and Middle Eastern buyers are increasingly substituting Indian beans for more attractively priced African coffees. Simultaneously, Indian shipment volumes are at risk of declining despite the country’s renowned coffee quality, threatening its historic export dominance.

Global volatility is further amplified by U.S. import tariffs, regulatory complexities with the EU’s deforestation rules, and uncertain weather in Brazil and Vietnam—the world’s leading suppliers. These combined with speculative trades and tightening inventories have pushed global benchmark prices and spot premiums to rare highs. Meanwhile, global market observers like BMI Research have raised 2025 forecasts, reflecting a consensus around near-term tightness but also hinting at potential relief if weather and diplomacy improve in the second half of the year. Against this backdrop, exporters, importers, and roasters must tread carefully, balancing supply risks with evolving market preferences and the imperative to maintain traceability and sustainability in turbulent conditions.

📈 Prices: Latest Exchange Data

Exchange	Contract	Closing Price	Weekly Change	Market Sentiment
ICE NY (Arabica)	July 2024	USD 2.23/lb	-2.5%	Bearish
ICE London (Robusta)	July 2024	USD 4,050/tonne	-1.1%	Neutral
Export Premium India (Robusta Parchment AB)	Spot vs LIFFE	+USD 1,200–1,300/tonne	+USD 400–500 YTD	Highly Uncompetitive
Export Premium India (Robusta Cherry AB)	Spot vs LIFFE	+USD 750–850/tonne	+USD 600 YTD	Uncompetitive

🌍 Supply & Demand Drivers

• Surging Indian Premiums: Premiums for Indian robustas now greatly exceed those from Uganda/Ethiopia, eroding competitiveness.
• Market Share Shift: Buyers in Europe (notably Italy, Germany) and the Middle East are substituting Indian coffee with Ugandan and Ethiopian beans due to cost advantages.
• Trade Policies: U.S. tariffs on Brazilian coffee and the EU’s deforestation regulation are driving uncertainty, cost, and supply redirection.
• Weather Worries: Brazilian and Vietnamese supply is under pressure from adverse weather, adding to global price volatility.
• Speculative Positioning: Net long positions in arabica and robusta have declined, reflecting greater market caution.
• BMI Forecast: BMI Research raised its global coffee price forecast to $3.40/lb for 2025; prices may ease if tariffs/disruptions are resolved later in the year.

📊 Fundamentals: Production & Global Inventory

Country	2023/24 Production (mn bags)	2023/24 Exports (mn bags)	2023/24 Ending Stocks (mn bags)
Brazil	66.3	41.0	3.2
Vietnam	28.0	25.7	1.1
India	6.2	5.7	0.7
Uganda	6.1	5.8	0.3
Ethiopia	10.6	4.1	1.2

• Ethiopia set to achieve a record 11.6 million bags in 2025/26 (+9% YoY), driven by favorable weather and agronomic improvements.
• India’s export value up 46% YoY, but volume growth stagnant as higher prices lead to reduced shipments in some segments.
• Brazil and Vietnam remain the backbone of global robusta and arabica supply, but adverse weather is a key risk.

🌦️ Weather Outlook & Yield Impacts

• Brazil: Sporadic rainfall in Minas Gerais and Espírito Santo continues to challenge flower set and bean development. Frost risk receding, but soil moisture remains below average—risk of quality downgrades for late-harvested arabica.
• Vietnam: End of dry season brings intermittent rains. Soil moisture is recovering, but a full recovery will depend on consistent rainfall through July. Overall, outlook remains cautiously optimistic for 2024-25 harvest.
• Uganda/Ethiopia: Above-normal rainfall and good temperatures support robusta and arabica flowering. Ethiopia’s productivity boost continues on track.
• India: Monsoon onset is timely in main southern coffee belts, but excessive rain in parts of Karnataka and Kerala is raising concerns about potential fungal disease outbreaks.

📌 Global Production, Export & Stock Comparison

Country	2023/24 Production (MT)	Export Volume (MT)	Main Destinations	Key Advantages
India	375,000	389,000	Italy, Germany, Russia, UAE	Premium quality, reliable supply, strong flavor
Uganda	350,000	338,000	Europe, Middle East	Lower cost, improving quality, EUDR readiness
Ethiopia	694,000	~250,000	Middle East, EU, Asia	Growing yields, premium Arabicas
Vietnam	1,800,000	~1,600,000	Global (esp. EU, US, Japan)	Price competitive, reliable

📆 Trading Outlook & Key Insights

• 🔍 For Exporters: Indian exporters should consider cost rationalization or enhanced branding to maintain premium robusta markets. Explore new specialty and value-added channels to offset lost share to Africa.
• 📉 For Buyers/Roasters: Diversify sourcing; review EUDR compliance readiness. Take advantage of temporary price advantages from Uganda/Ethiopia, but monitor mid-term weather and political risk in top producers.
• 🕰️ For Traders: Expect continued volatility as weather, EU/US policy, and speculative moves shape pricing. Hedging advisable due to unpredictable direction in the near term.
• 💡 Market Sentiment: Short-term bearish due to recent correction, but underlying supply risks support medium-term strength. Monitor negotiations between Brazil and US on tariffs, and the pace of Vietnam’s harvest progress.

📈 3-Day Regional Price Forecast

Exchange/Origin	Current Price	3-Day Outlook	Sentiment
ICE NY (Arabica July)	USD 2.23/lb	2.18–2.26/lb	Neutral/Bearish short-term
ICE London (Robusta July)	USD 4,050/tonne	4,000–4,100/tonne	Neutral/Stabilizing
Vietnam (Hanoi, Spot Physical)	~USD 5,650/tonne	5,600–5,700/tonne	Firm/Bullish
India (Spot Premium)	USD 1,200–1,300/tonne above LIFFE	Flat-to-Down slight narrowing if Brazil weather improves	Bearish