Trump stand-off with Colombia leads to surge in coffee prices
US president Donald Trump's threats to impose trade tariffs on Colombia have caused waves in the coffee market recently. Colombia is the world's third-largest coffee producer, after Brazil and Vietnam.
Arabica coffee futures have jumped 6.55% over the last week and 15.14% in the last month, trading at $3.69 (€3.56) per pound on Friday morning.
Trump has recently threatened to slap a blanket 25% tariff on all Colombian imports amid escalating tensions between the two countries.
Items which could be impacted by such a tariff include coffee, crude oil and cut flowers.
The threat from President Trump followed the Colombian president, Gustavo Petro, declining to accept two US military deportation flights transporting migrants back to Colombia.
Although Petro subsequently did accept these migrants, uncertainties in the coffee market remained.
Colombia could be significantly impacted by US tariffs, as the latter is its biggest trade partner. Similarly, in the event of an escalating trade war between the two countries, the US could also be affected by higher coffee prices.
In 2023/2024, the US imported 20% of its coffee from Colombia, which is its second-largest supplier, behind Brazil, which accounts for 32%, according to the US Department of Agriculture. Some 8% of coffee arriving in the US comes from Vietnam, whereas 7% comes from Honduras.
Poor Brazilian harvests push coffee prices up
Faltering harvests in Brazil, the world's biggest coffee producer, have also contributed to spiralling coffee prices over the last several months. Arabica coffee futures have surged 90.21% on a year-on-year basis as of Friday.
The Brazilian currency - the real (BRL) - gaining strength recently has caused a dip in exports too, further adding to tight coffee supply worldwide, which has already been affected by ongoing supply issues and lower stocks.
Bad weather in Brazil's coffee belt, which has included extreme heatwaves, droughts and frosts has also exacerbated the situation.
Arabica harvests from Colombia and Central America are also experiencing longer delays in reaching the market, mainly because of intense rainfall in these regions.
This has affected harvest timelines, leading to problems such as late ripening and fallen coffee cherries. Coffee quality can also be reduced because of these issues, which in turn, causes higher price fluctuations and market disruptions.
In its first estimate for the 2025-2026 season, Brazil's National Supply Company (CONAB) estimates the country's coffee output to be about 51.81 million bags, according to Comunicaffee International.
If so, this will be a 4.4% drop on an annual basis, as well as being a three-year low.
In a separate development, India has also warned that its 2025 coffee exports are likely to be approximately 10% lower due to forecasts of a hot summer and droughts.
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