Coffee prices remain volatile with weather and tariffs in focus

Coffee prices rose on Monday, the 28th, supported by weather risks in Brazil and global trade uncertainties due to US tariffs imposed on Brazilian products in mid-July. The September Arabica contract traded above 300 c/lb on the 28th, closing at 307,7 c/lb, a 1,5% increase in seven days. A new cold front arrived in Brazil this week, dropping temperatures in the main coffee-producing regions.

Southern Minas Gerais may see a sharper drop, with Somar forecasting minimum temperatures between 6°C and 8°C on July 30 and 31. 1/7 However, some models from the Center for Weather Forecasting and Climate Studies (CPTEC) indicate that temperatures could drop below 5°C in the next three days, with a greater threat of frost in southern Minas Gerais.

According to Laleska Moda, market intelligence analyst at Hedgepoint, in addition to the risks posed by frost, hailstorms hit some coffee farms in the region over the weekend. "Although the event was localized, affecting only a small area, these farms reported damage from the hailstorms, including leaf loss and possible impact on production on 26/27. However, as mentioned, it was a localized event, and it is still too early to assess the extent of the damage," she says.

In the Brazilian Conilon regions, where the 25/26 harvest is essentially complete, the weather has been more favorable, with some farms in Espírito Santo and Bahia entering the 26/27 flowering period. In this context, increased rainfall is vital for proper flower development and establishment.

The expert explains that current climate risks in Brazil, coupled with uncertainty about the future of Brazilian coffee trade with the US, have also kept sales in the country slow, while producers await further decisions. Although the Brazilian government and other supply chain actors, such as Cecafé and the National Coffee Association (NCA) of the US, have engaged in trade negotiations with the US government, an agreement to exempt coffee from tariffs has not yet been reached.

If the 50% tax is approved, it could temporarily halt the flow of Brazilian coffee to the US, leaving American roasters and exporters to rely on other sources, such as Colombia, Central America and East Africa, according to the analyst.

However, not only are most of these origins in their off-season, with limited supply in the second half of 2025, but the price differentials are also greater than those in Brazil. Although Brazilian price differentials have been high in recent months, Brazilian beans are generally cheaper than those from other origins, and with the current harvest, prices have been pressured downward recently. Therefore, not only could the US face a reduced coffee supply if it does not import from Brazil, but prices are also likely to rise in the country, as mentioned in a previous analysis.

"In a broader perspective, although some countries, such as Japan and the EU, have reached agreements to reduce the current proposed tariffs, the rates could still impact the American economy, especially by increasing inflation. Therefore, in the medium and long term, demand for coffee could be affected, with the prospect of persistent price volatility," he says.