Coffee futures started the new year on a positive trajectory, extending the gains observed at the end of the previous year. The global Coffee market remains under pressure, grappling with reduced production levels and declining export volumes, with Brazil and Vietnam being the most affected. Unfavorable weather conditions, including irregular rainfall and extreme temperatures, have significantly disrupted Coffee cultivation in these leading producing regions, straining global supply.

Furthermore, global beverage prices experienced a notable recovery last month, as highlighted by the World Bank’s Beverage Price Index. This upward trend is expected to continue, with the organization’s latest report indicating increases in agricultural, cereal, and export price indices since the previous update. These persistent pressures, coupled with escalating costs across the supply chain, have further strengthened the bullish momentum in Coffee futures as 2025 commences.

In Vietnam, Coffee prices have surged, driven by prolonged drought conditions that have severely impacted production. The 2023/24 crop year has witnessed a significant decline in output, exacerbating supply concerns. The General Statistics Office of Vietnam reported a 17.1% year-over-year decrease in Coffee exports for 2024, amounting to 1.35 million metric tons (MMT). This substantial reduction highlights the challenges facing the Vietnamese Coffee market, with supply disruptions creating ripple effects in global trade.

Similarly, Brazil's Coffee market is facing mounting difficulties. In December, Brazil exported 3.8 million bags of Coffee (60 kg each), marking a sharp decline of 22% month-on-month (MoM) and 8% year-on-year (YoY).  Adding to these challenges are uncertainties surrounding the 2025/26 Brazilian Coffee crop. Irregular weather patterns, including unseasonal rains and drought spells in key growing regions, have raised significant concerns about crop health and future yields. These climatic anomalies have heightened market volatility, with stakeholders closely monitoring potential supply disruptions.

The combination of reduced exports, unfavorable currency dynamics, and climatic unpredictability underscores the complex dynamics shaping the Coffee market. As global demand continues to rise amidst constrained supply, market participants are bracing for further price volatility, with weather conditions and economic factors playing pivotal roles in determining the trajectory of Coffee prices in the coming months.

According to ChemAnalyst, Coffee prices in the global market are expected to remain volatile with a significant surge in prices in Brazil and fluctuations expected in price trend in other regions. Brazil, the world's largest Coffee producer, is experiencing significant production challenges. The recent decision by Conab (National Supply Company of Brazil) to lower its Coffee crop estimate has further intensified concerns over supply shortages. This downward revision highlights the impact of irregular weather conditions and other production constraints on Brazil's Coffee output, adding upward pressure to global Coffee prices. As a result, market stakeholders are bracing for continued price volatility in the months ahead.