situation

The situation of Coffee Market in 2025 It is a gallimatisms. Different factors have caused the price of coffee to experience one of the Greater climbs in historywe must all add one more: the US tariff pulse with the rest of the world. And there is a great question about the table: if the great toasters stop selling both to the US because the costs are unbearable, will they adjust production or sell their surpluses cheaper to the rest of the world? The answer is that … it seems that everyone will make war on their own. Problems everywhere. The 2024 coffee harvest faced a series of problems that caused raw coffee prices to increase drastically. Extreme climatic factors how droughts and irregular rains hit the two Main coffee producers (Brazil and Vietnam). This has affected both the production and the quality of the grain, but they have also caused transport cuts due to Problems on the Suez channelwhich has delayed shipments and increased costs. All this, in addition to other factors, has caused coffee to be going through strong inflationary pressure, with increases that, depending on the week, have reached up to 40% compared to what is seen a year ago. It is something similar to what is happening with cocoa and that has turned coffee into one of the thermometers of the global economy. The blissful tariffs. The one that was missing in the equation was … Trump. Tariffor “tariff” has become the word Favorite From the new president of the United States, and these last weeks we have lived an authentic tariff syrup between countries. It is something that affects markets such as cars, oil, technology, Digital services, food products And, obviously, coffee. These tariffs proposed by the United States are a protectionist measure, but also a throwing weapon with a clear intention: threaten countries To do what the USA wants. A clear example is the Tariff threat to Mexico and Canadatwo of the main US business partners that originated Dimes and Diartes among the presidents of the countries. And also We have seen it with Colombia. If the Latin American country did not yield to the aggressive immigration policy promoted from the White House, the threat was to impose rates of 25% and up to 50%. And what product that the United States loves is one of the world powers? Coffee. Hitting the pocket. According to the Observatory of Economic Complexity, in 2022 Colombia exported 15.6 billion dollars To the US, of which almost 1.8 billion corresponded to coffee. Coffee is the great merchandise exported by the country, in terms of value, only behind oil. The New York Times warned that imposing 25% or more to Colombian goods would impact the pocket of the Americans and here there are two options: or stop consuming so much … or assume the extra cost. Variety of postures. Boris Wüllner is the CEO of Green Coffeeone of the largest producers in Colombia that has been investing great sums In the country. In an interview for The RepublicWüllner comments that it is time for companies to look for the way of being more efficient in the production chain, even toasting the grain on American soil to “avoid a larger tax effect.” In fact, he sees it as a business opportunity. While Latin American coffees will be taxed with 10%, those of Indonesia and Vietnam will face tariffs of a 32% and 46% respectivelywhich will allow, despite those 10%tariffs, the Colombian product is more competitive. Wüllner also considers that it will be the consumer who absorbs the increase that these tariffs will imply, but that they will not stop drinking coffee. Different opinion have from Europe, specifically from Lavazza. Touching the limit. Its executive director, Antonio Baravalle, believes that consumer tolerance is reaching the limit due to high prices and is clear that this increase in costs for consumers is what has generated “an average contraction of the world coffee market of approximately 3.5% in the last two years”. And that the tariffs had not yet come into play. From the US National Coffee Association they share this opinion, commenting that “the great price increase is eaten the liquidity of the customers. They do not have all the money to buy what they need.” Beyond producers and USA. The issue is that it is not an issue that affects only the directs involved. “If the US imposes a 25% tariff on all Colombian exports, the coffee market, which is already red, will heat even more,” I commented A few days ago Javier Blas, Bloomberg columnist. Colombia is the third producer worldwide of a variety, the Arabica, which is also the most appreciated among specialty coffee shops. And that the Colombian market sets out in the United States could impact the rest of the world. Liquefied natural gas. As? With more price increases to cushion the coup to producers and toaster. But … what if the situation were different? Here we can look at the LNG. If large toasters reduce purchases in the US, the most likely scenario is a combination of production and detour adjustments to other markets. In other sectors, such as liquefied natural gas, we have already seen similar dynamics: when US imports decreased after fracking boomexporters they redirected Part of their sales to Asia and Europe, and even slowed their production. Although coffee and LNG play in different leagues (one is an energy raw material, the other a perishable agricultural product), market logic is comparable: less demand in a key destination forces to look for other markets or produce less to avoid collapsing prices. That could be the strategy of large coffee producers, who are already preparing for it optimizing costs and logistics, as Wüllner proposes. Hope? Depends. On the one hand, the FAO (the United Nations Food and Agriculture Organization) estimates that The worst has not happened And that, because coffee has no alternatives, although prices rise, consumers will continue to pay them. On the other, … Read more