☕ Coffee & Cocoa Weekly Update | October 20
Coffee News
ICO September Report: Coffee Prices Rise, Then Fall — Volatility Persists
According to the International Coffee Organization (ICO), the average composite indicator price for September 2025 was 324.62 cents per pound, up 9.3% from August. Throughout the month, prices fluctuated sharply between 298.14 and 360.74 cents per pound. Compared to September last year, prices are still up by 25.4%, and the average for the past 12 months stands at 306.62 cents per pound.
StoneX Predicts a Balanced Global Coffee Market for 2025/26
The investment firm StoneX says current coffee prices are being shaped by a wide mix of market factors.
First, global coffee inventories have dropped by 22 million 60-kg bags over the past four years. Low stock levels typically support prices since they reduce the buffer available during supply shocks or disruptions.
On the other hand, persistent price inflation is beginning to weigh on demand. For instance, the Brazilian Coffee Industry Association (ABIC) reported that retail consumption in Brazil fell 5.4% in the first eight months of this year.
At the same time, this year’s Arabica crop in Brazil has been smaller than expected, and rainfall patterns across the coffee belt remain uncertain.
As a result, the market is facing a blend of bullish and bearish forces — which helps explain the intense price swings we’re seeing lately.
U.S. Tariffs on Brazilian Coffee Start to Bite — Exports Down 18% in September
The effects of the 50% tariff imposed by the U.S. on Brazilian coffee are now clearly visible. In September, Brazil’s coffee exports dropped sharply by 18.4% year-on-year to 3.75 million 60-kg bags, according to data from Cecafe, the country’s coffee exporters association.
Still, this remains one of the highest September export volumes on record — just behind 4.6 million bags in 2024 and 4.2 million in 2020.
Interestingly, total export revenue actually rose 7.6% to $1.37 billion, thanks to a 36.2% increase in the average export price per bag.
Green coffee exports fell 18.3% to 3.45 million bags. Within that, Arabica exports dropped 10.1% to 2.97 million bags, while Robusta exports plunged 47.4% to 489,685 bags.
Exports of processed coffee — mostly instant coffee — fell 19.5% to 295,508 bags.
Wild Price Swings Slow Down Brazilian Coffee Sales
The global coffee market is going through a tough stretch. Brazil’s actual output has fallen short of expectations, global inventories are near zero, weather conditions remain unstable, and U.S. tariffs continue to weigh on exports.
All these fundamentals have kept coffee prices highly volatile throughout September. Looking ahead, Brazil’s 2026/27 crop is expected to play a key role in rebuilding global stocks — meaning that any signs of potential crop loss immediately trigger market anxiety and further volatility.
Domestically, Brazil’s Arabica spot price index fell by 200 reais per bag (–8.4%), and Robusta prices slid by 190 reais per bag (–12.5%) in September.
Even so, producers are holding off on sales, waiting for more favorable prices.
Retail Coffee Prices in Brazil Fall for Three Straight Months — But Not for Long
According to IBGE, Brazil’s national statistics institute, retail coffee prices dropped for the third month in a row in September — though the decline has slowed.
Prices fell 0.06% in September, following a 2.17% drop in August and a 1.01% decrease in July.
IBGE notes that retail prices have been falling mainly due to earlier declines in global coffee futures.
However, some roasters have already started notifying retailers about upcoming price increases, citing lower-than-expected domestic production and the added costs of U.S. tariffs pushing green coffee prices higher again.
For perspective — over the past 12 months, Brazilian retail coffee prices have risen 54.55%, including a 38.3% surge just between January and September.
Coffee Blossoms Return to Brazil’s Fields, but More Rain Is Needed
Recent rainfall across Brazil’s main coffee-growing regions has lifted growers’ spirits, with 20–25 mm of rain triggering the first wave of flowering. Farmers say that after a period of stress, coffee trees are now blooming normally — though timing varies by region, variety, and even microclimate.
But flowering is just the start. Ideally, an additional 40–60 mm of rain is needed in the following days to ensure the best possible bloom.
In Cerrado, local associations report widespread flowering but lingering worries over high temperatures. In other Arabica regions, some trees have shown uneven or delayed flowering due to erratic weather, with rainfall distribution and temperature shifts playing a big role.
Even Robusta, which usually handles tough weather better, hasn’t been immune. The first flowering wave went smoothly, but the second was weaker due to low rainfall.
Vietnam’s New VAT Law May Impact Coffee Prices and Exports
Starting July 1, 2025, Vietnam’s new Value-Added Tax (VAT) Law went into effect, requiring a 5% tax on several basic agricultural goods that were previously tax-exempt — including coffee, rice, and seafood.
The Vietnam Food Association said this shift has tied up large amounts of exporters’ working capital in pending VAT refunds, slowing their ability to buy crops from farmers and putting pressure on domestic prices.
The Vietnam Chamber of Commerce and Industry (VCCI) added that while the new VAT law was intended to bring reform, it has actually introduced new barriers that need to be removed for the agri-forestry-fishery sectors to grow.
In the coffee industry, exporters have voiced concern about the unclear definition of “preliminary processing.”
According to the Vietnam Coffee and Cocoa Association, green coffee beans — which are not deeply processed but have relatively high export value — are unfairly taxed at 5%.
Meanwhile, exporters often wait up to six months for payments from European and American buyers, while VAT refund processing takes just as long. With so much capital locked up, it’s become a heavy financial burden.
Vietnam’s Coffee Prices Ease Slightly as Traders Expect a 10–15% Bigger Harvest
According to Reuters, Vietnamese traders expect the country’s 2025/26 coffee crop to increase by 10–15%, thanks to favorable weather conditions.
In the country’s main coffee-growing region, the Central Highlands, the latest Robusta spot prices range from 114,000–115,000 VND/kg (about $4.33–4.36), down slightly from last week’s 116,000–117,000 VND/kg.
One trader said the beans look good so far. Harvesting has begun, but volumes remain small; most of the crop will start flowing next month.
Currently, Vietnamese coffee is quoted at a $50/ton discount to international futures. However, many foreign buyers aren’t accepting those offers yet, keeping the local market quiet until the main harvest begins.
Durian Farming Booms in Hainan — 2,000 Tons a Year and Rising
About five years ago, farmers on Hainan Island started experimenting with durian cultivation to reduce reliance on imports and get fresher fruit to consumers faster.
Today, Hainan produces roughly 2,000 tons of durian per year, though supply remains limited and prices high. The island’s durian-growing area has quadrupled in the past five years — from 700 hectares in 2020 to about 2,600 hectares today — growing around 30% annually, mostly in Sanya, Baoting, Ledong, and Lingshui.
Right now, Hainan durians sell for about ¥100 per kilogram, but as production expands, prices could drop to around ¥20/kg. The main challenges lie in overcoming the island’s climate constraints and improving farming techniques to lower costs. Typhoons and cold spells are also major threats — it takes four years for durian trees to bloom, but one super-typhoon can wipe them out overnight.
In 2024, China imported over 1.56 million tons of durian, and the Hainan provincial government aims to expand planting to 6,600 hectares by 2028, introducing automated irrigation, AI-based fruit sorting, and intercropping systems to boost yields.
Analysts, however, believe the local market impact won’t be noticeable until domestic production reaches hundreds of thousands of tons — something unlikely to happen in the short term.
🍫 Cocoa News
Market Sentiment Shifts — Global Cocoa Supply May Finally Improve in 2025/26
With cocoa output improving in Central and South America and demand cooling, the global cocoa shortage finally shows signs of easing — and could even flip into a surplus over the next few years.
According to Bloomberg’s market survey, the 2025/26 season may see a global surplus of 186,000 tons, more than double the projected surplus for 2024/25. This would help replenish depleted global inventories after several poor harvests in West Africa.
Commodity firm Latam Commodity Traders estimates that Ecuador — the world’s third-largest producer — will increase output by around 5% to 580,000 tons, thanks to higher yields and expanded acreage.
At the same time, StoneX noted that additional output from Peru, Colombia, and Venezuela could lift total South American production by up to 100,000 tons, weather permitting.
Even though cocoa prices remain historically high, they’ve already fallen about 40% in 2025 as chocolate demand softens and producers reformulate their recipes. With expectations for a stronger new crop, this could cap any short-term rebound in cocoa prices.
At the European Cocoa Forum (Sept 16–18), Rabobank forecasted that cocoa prices are likely to trend downward in the short- to mid-term.
Ghana Raises Cocoa Farm-Gate Prices Twice in Two Months — A Rare Move Welcomed by Farmers
On October 2, Ghana’s Finance Minister Dr. Cassiel Ato Forson announced another increase in the official cocoa farm-gate price, raising it to 3,625 Ghanaian cedis per 64-kg bag — up 400 cedis, or 12.3%, from the price set just two months earlier in August.
The new rate, approved by the Producer Price Review Committee, took effect on October 3.
On October 11, the National Cocoa Farmers Association of Ghana expressed strong approval of the decision, saying it restored farmers’ confidence and strengthened their relationship with the government.
Earlier, farmers had voiced disappointment over August’s smaller increase, but this second raise was seen as a sign that the government is finally listening to growers’ concerns.
As the association put it:
“This time, we can see the government is paying attention. We hope this continues — it’s a positive move for Ghana’s cocoa farmers in the long run.”
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