The surge underscores two forces: tightening supply from major producers like Vietnam and Brazil, and shifting trade flows shaped by global political risk.
On ICE Futures Europe (London), Robusta hit a three-month high. The November 2025 contract rose $583/ton week-on-week. More striking, the September delivery contract spiked from $4,201/ton to $4,866/ton in just seven days.
On ICE Futures US (New York), Arabica mirrored the rally. The December 2025 contract leapt 44 cents/pound, while September delivery climbed from 341.65 to 390.65 cents/pound. The surge confirmed that market heat is not confined to Robusta; Arabica is now equally exposed.
This rare dual surge highlights the fragility of global coffee supply chains and signals higher volatility ahead for both producers and consumers.
Key Drivers: From Policy to Natural Fluctuations
The surge in coffee prices is not a random swing but the outcome of four converging forces. At the centre is a new U.S. tariff policy—the primary trigger that set the market in motion.
1. The U.S. 50% Import Tariff on Brazilian Coffee: The Supply Chain Shock
Impact Level: ⭐⭐⭐⭐⭐ (Very High)
In early August 2025, the U.S. imposed a sudden 50% tariff on coffee imports from Brazil, the world’s largest producer. Brazil accounts for 37% of global output and supplies about one-third of U.S. imports. Overnight, Brazilian coffee became economically unviable for many U.S. buyers, forcing widespread contract delays and cancellations.
This sparked a race for an alternative supply. U.S. roasters and importers rushed to source from Colombia, Peru, and Ethiopia, driving up local prices and feeding into global benchmarks. The initial costs fell on importers, but the burden is already shifting to consumers: U.S. retail coffee prices are up 14.5%, with small cafés warning of hikes between 18–25%.
Meanwhile, the geopolitical chessboard shifted. China signed a five-year deal with 183 Brazilian exporters, redirecting volumes once destined for the U.S. This move not only restructured global coffee trade flows but also reduced U.S. influence in price formation, amplifying the volatility across both Robusta and Arabica markets.
2. Frost in Brazil: A Natural Threat
Impact Level: ⭐⭐⭐⭐ (High)
Extreme weather added fresh pressure to supply. Late-winter frosts in southeastern Brazil, especially in Cerrado Mineiro, raised fears of crop damage for the 2025/26 harvest. Early forecasts suggest a 5.5% drop in Brazil’s coffee output, deepening concerns over future shortages. Investors responded quickly, accelerating buying on futures exchanges as a hedge against weather risk.
3. Record-Low Stocks and Declining Exports: A Tight Supply Picture
Impact Level: ⭐⭐⭐⭐ (High)
Coffee inventories on ICE exchanges fell to record lows in both Arabica and Robusta, signalling an acute supply squeeze. This structural shortfall is expected to sustain long-term upward pressure on prices.
Brazilian export data confirms the strain: in July 2025, shipments totaled 2.45 million bags of green coffee, down 28.1% year-on-year. While multiple factors may explain the drop, the signal is clear—supply from the world’s top exporter is tightening, reinforcing the bullish momentum.
4. Weakening USD and Fed Rate Cut Expectations: Macro Tailwinds
Impact Level: ⭐⭐⭐ (Moderate)
Macro conditions amplified the rally. The U.S. dollar weakened sharply, while markets priced in a potential Federal Reserve rate cut in September 2025. For investors holding other currencies, USD-denominated commodities like coffee became more attractive, fueling additional speculative demand. Though not the main driver, these macro shifts acted as a catalyst for an already overheated market.
Vietnam Coffee Market Report: Price Shock in Week 18–24 August 2025 and Macro Unknowns
The trading week of 18–24 August 2025 marked a dramatic breakthrough in Vietnam’s domestic coffee market. Prices surged to historic highs, signalling both bullish momentum and deeper macro uncertainties.
Impressive Price Surge: At the start of the week, domestic prices stood at 116,800–117,500 VND/kg, already elevated after strong gains the week before, when Dak Lak averages hit 109,013 VND/kg (up 7.6% week-on-week). The rally accelerated on August 21, with prices jumping 6,000–6,100 VND/kg in a single session, reaching a weekly peak of 123,000–123,900 VND/kg. By week’s end, levels held firm at 123,500–124,000 VND/kg, reflecting strong confidence and speculative demand.
Drivers Behind the Price Shock
- Inventory–Price Discrepancy: A Risk Premium Effect: Despite surging prices, fundamentals painted a different picture. Global Robusta inventories rose 5.99% in June 2025, reaching 3.2 million bags. Meanwhile, Vietnam’s 2025/26 output is forecast to expand sharply to nearly 2 million tons. The divergence suggests that markets are not reacting to present supply, but rather pricing in future risks. This “risk premium” explains why prices stayed strong despite no immediate evidence of physical shortage.
- Exchange Rate Pressures: Macro Linkages at Play: Currency shifts also fed the rally. A stronger U.S. dollar (USD) against the Vietnamese dong (VND) made Vietnamese exports more competitive. The USD/VND rate climbed from 26,040 (August 11) to 26,080 (August 18), incentivising exporters to bid higher in domestic markets to secure supply for international buyers. This FX-driven demand provided another upward push to already overheated prices.
Vietnam Domestic Coffee Prices by Day (August 18–24, 2025)
Unit: VND/Kg
Market Forecast: August 25–31, 2025
Experts expect both global and Vietnamese coffee prices to extend their bullish momentum next week, though short-term corrections remain possible.
Robusta Market
Robusta prices are poised to challenge the $4,800/ton resistance level. If breached, futures could test the $5,000/ton mark. However, after last week’s sharp rally, the risk of profit-taking by speculators is high, which may trigger a short-term technical correction.
Arabica Market
Arabica futures are projected to climb further, targeting 400–410 cents/pound. The main drivers remain:
- Brazil’s low production cycle and adverse weather conditions are raising supply concerns.
- A weaker U.S. dollar and expectations of Federal Reserve policy easing, which encourage speculative inflows.
Unless the U.S. government revises its new tariff policy, many analysts believe Arabica could return to its previous peak levels, pulling Robusta prices higher in tandem.
Vietnam Domestic Market
Domestic prices in Vietnam will continue to track Robusta trends on the London exchange. With end-of-season supply running low and farmers holding back stocks, prices remain strongly supported. A move above 125,000 VND/kg is possible this week, though trading volumes will likely stay limited due to tight supply.
See more: Coffee Week 11-18/8/2025: Strong Breakthrough, Reaching Record Peaks
