Insufficient production, tariff shocks cause a big rise in coffee bean prices in Brazil in August

According to a report by the Brazilian website "G1," research indicates that the harvest of robusta beans has concluded, with prices remaining high. On the 25th, a bag (60 kg) of coffee beans was priced at 1469.43 reais, with a cumulative increase of 43% in August.

Meanwhile, the harvest of arabica beans is also nearing its end, with prices showing a significant rise. Data from the report shows that the price increase for this type of coffee bean reached 26.3% in August, with each bag priced at 2287.56 reais.

Researchers analyze that this price surge is primarily due to the tense inventory situation, which highlights the shortage of domestic coffee bean production and losses in the processing process at the end of the harvest season. Additionally, the U.S.'s increase in coffee import tariffs is also affecting Brazil's domestic coffee market.

After the U.S. announced a 50% tariff on Brazilian coffee exports, the entire coffee industry faced significant uncertainty. This measure officially took effect on August 6. An analysis report released by the Center for Advanced Applied Economic Research at the University of São Paulo at the end of July pointed out that Brazil may be forced to redirect part of its coffee production to other export markets, but this requires flexible logistics and commercial strategies to mitigate losses in the domestic production chain.

The agricultural products most affected by the Trump administration's new tariff policy include beef, fresh fruits, and coffee. Given the significant share of Brazilian coffee in the U.S. market, this policy will not only weaken the competitiveness of Brazilian coffee but also increase the final price for U.S. consumers and affect the formula of traditional blended coffee, as these blends rely on Brazilian coffee beans to provide a balance of taste and aroma.

The research center also mentioned that domestic coffee prices in Brazil are also fluctuating with the trends in the New York and London exchanges, as some speculative funds have increased their buying power, expecting further price increases after the tariff policy is implemented. However, the institution also believes that there is currently no clear evidence to suggest that the rise in domestic prices is entirely driven by the new tariff policy.

Currently, although the 2024-2025 crop season has brought higher returns for Brazilian coffee producers, the sales outlook for the 2025-2026 crop season is not good. Researchers point out that due to the price trend and external uncertainties, producers are only maintaining a small amount of sales to ensure cash flow, while postponing large transactions to observe the direction of tariff policies.