Coffee Outlook
Blended coffee cost pressure persists through year-end as Vietnam tightens robusta supplies.
Typhoon Kalmaegi and flooding in Vietnam's Dak Lak province have constrained robusta production, supporting elevated prices on blended and instant coffee products through Q4. Your robusta-based SKUs will face sustained cost pressure heading into year-end.
Use a cost model to track the full impact: Build a basket-of-goods model for your blended coffee products that includes robusta commodity price movements, packaging, energy, and logistics to understand the true finished product cost. This allows you to benchmark supplier claims against actual market movements and avoid being blindsided by unjustified price increases.
Tariff removal opens margin recovery opportunity on arabica products in Q1 2026.
The US removal of the 40% tariff on Brazilian coffee is accelerating shipments from bonded warehouses, creating a procurement window for arabica beans in early 2026. If Brazil's weather cooperates, arabica costs should soften materially in Q1.
Use forecasts to guide sourcing strategy: Build a forecast of arabica unit costs through Q2 2026 incorporating Brazil's weather patterns, tariff timing, and seasonal supply curves. This allows you to identify the optimal timing to lock in Brazilian bean contracts and understand when to plan retail pricing reductions. External data shows green coffee prices fell sharply after tariff removal, but timing is critical - competitors will move fast.
Plan differentiated pricing strategy:
Aggressive on arabica, firm on blends.
As tariff-driven arabica savings hit retail channels, expect price deflation on 100% arabica products. Counter with competitive retail reductions to maintain market share against value-focused competitors. Simultaneously, maintain pricing discipline on robusta-blend products where supply constraints limit cost relief.
Benchmark your suppliers using market intelligence: Create a watchlist comparing your supplier's arabica pricing against published commodity indices (ICE Arabica Mar-26 and May-26). When suppliers justify price increases or decreases, validate their claims against actual market movements.
One retailer recovered $200,000 in supplier rebates by understanding the full cost breakdown and challenging unjustified claims. Industry data shows margin squeeze is acute.
Coffee Forecast
Commentary by Amalie Egedal
The rally which led to coffee prices increasing roughly 45% since August was partly caused by a surge in speculative positions amid uncertainty about the implementation of the EUDR and high US tariffs on Brazil. The policies have since been delayed and removed, respectively, which is expected to alleviate physical tightness. Coffee prices are above our estimated price range, indicating they are too high and will need to decline soon.
Our analysis points to a peak in Q4, followed by a decline into 2026.
A bearish reversal is expected due to a projected production surplus and rise in inventories. However, the decline has not yet been confirmed by the technical signals, and this is something to monitor.
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