Why are coffee prices falling summary
- Coffee prices keep falling due to a growing global supply surplus
- Brazilian farmers are withholding beans to push sales into 2026
- Market backwardation is driving speculators out and intensifying downward pressure
- Coffee roasters are buying hand to mouth to exploit falling prices
- Analysts expect further declines with Arabica and Robusta remaining under pressure
Last year, the price of coffee reached never-before-seen highs.
Prices reached an all-time high of $4.40 (€3.79) per pound in February, according to Trading Economics. They remained high throughout the year, before finally beginning to decline significantly again in early December.
While the decline in prices is partially due to a surplus in the commodity, other factors have exacerbated price falls.
Why coffee prices skyrocketed
There is no single factor influencing coffee’s price drop. And interestingly, weather is only part of the answer.
Robusta coffee saw weak production in Vietnam, intensified by both localised weather conditions and El Niño-related weather patterns, explains Andrew Moriarty, a commodities analyst at Expana. These combined to promote very hot and dry weather conditions, leading to production declining by 10% each year.
What are Arabica and Robusta?
There are two main types of coffee - Arabica and Robusta. Arabica is often considered a higher quality blend, and is usually grown at high altitudes. Robusta, as its name suggests, is more robust, and less sensitive to growing conditions. It is normally considered of a lower quality, and often found in instant coffee.
Arabica replaced some of this depleted Robusta in trade flows, especially for cheaper blends, keeping prices there high as well. This was followed by a supply squeeze, and countries like Brazil deciding to sell fewer beans. Alongside this, buyers became less interested in the market.
Enter tariffs. The US‘a trade barriers on major coffee-producing countries, including Brazil and Colombia, exacerbated these problems, suggests Moriarty, beginning to “shape and warp trade flows” and allowing prices to “skyrocket to all-time highs”.
These high prices were divorced from the fundamental supply of the crop – there was not a shortage, especially of Arabica, but prices were being pushed up by tariffs and thin liquidity (low trading volume).
Volatile tariffs kept prices high throughout 2025, says Moriarty. Outside of the US buyers became more cautious, only buying what they needed whilst waiting to see how tariffs, and the volatility they created, would further affect coffee prices.
Prices started to decline when coffee was exempted from tariffs, and speculators started to sell into the market.
Why prices are falling
There is a significant surplus of supply in coffee, explains Moriarty. However, much of this has not been sold.
In Brazil, farmers have not been selling as much as usual. Their not selling, Moriarty suggests, does not reflect a shortage of coffee – as mentioned, there is a surplus – but rather lack of farmer willingness to sell. Many farmers have expressed a willingness to keep beans back so that sales can be recorded in the 2026 tax year.
The market has also been, and remains, in backwardation. This means that futures prices, prices paid to lock in supply at a future date, were lower than spot prices, the price paid for a commodity bought immediately.
This is often indicative of a short-term supply squeeze, where supply is low – in this case, due to farmers withholding beans. But further in the future, farmers are still expected to sell, so such a short-term squeeze is not having the same effect on the price that a genuine shortage would.
Because of this backwardation, a lot of speculators are trading out of the market – they prefer it when the market is in contango, meaning that futures prices are higher than spot prices. This trading out is helping to push prices down further.
Futures prices continue to fall. Moriarty predicts that farmers will eventually decide to sell, so they can lock in a price before they fall even further.
Coffee roasters, meanwhile, have been paying hand-to-mouth rather than risk locking in a futures price that would give them a disadvantage in the long-term. This allows them to take advantage from falling prices. They have learned from mistakes made in the cocoa sector, where many key players became locked into higher prices as the price of cocoa fell, meaning they couldn’t take advantage of this.
Will prices continue to decline?
Moriarty predicts that prices will continue to decline. This is based on knowledge of the crop fundamentals, and is informed by conditions on the ground.
There is also a low-liquidity environment for coffee, meaning trade volumes are low.
In fact, suggests Moriarty, many in the industry expect coffee to reach around $2 (€1.72) per pound, if not below, within the next couple of months.
Commodity prediction platform ChAI also predicts further decline. Robusta will likely continue to decline due to low demand, it suggests, although upward pressure on the cost of raw materials has the potential to counter this.
Arabica is also predicted to continue trending downwards, driven by both demand and supply.
