Coffee prices, which reached record high in early 2025, have now fallen by about 25 percent, which has brought great relief to coffee markets and branded companies. The main reason behind this decline is believed to be better production expectations and improvement in global supply.
Causes of prices and decline of prices
According to the International Coffee Organization (ICO), the average price of coffee in May 2025 was 334.41 cents per pound, which is 0.4% lower than in April. However, this price is still 60.5% higher than in May 2024. But in April 2025, coffee prices reached a high level of $ 4.11 per pound, after which there has been a steady decline. By mid -June, the prices of Ice Coffee C Futures Contract came to around $ 3.25 per pound, the lowest level since January.
The biggest reason behind this decline is Brazil and Vietnam expectations of better crop. The crop of Brazil, the world’s largest Arabica coffee producer, is estimated to increase by 0.5% in 2025/26, while Vietnam’s Robusta Coffee production is expected to increase by 6.9%. Good rains in these two countries and favorable weather conditions have helped increase production.
Balance of global production and demand
Global coffee production in 2023-24 was around 170 million bags, which is estimated to increase to 173 million bags in 2024–25. However, this level is still lower than 2020–21. In the last few years, production was affected due to bad weather and drought, but now production is improving due to better weather.
According to the US Department of Agriculture (USDA) reports, production is likely to increase in production in many other coffee producing countries besides Brazil and Vietnam, which will increase the market supply and pressure on prices.
Branded companies get relief
The fall in coffee prices will benefit large companies like Nestle India, Hindustan Unilever (HUL), Tata Consumer Products. The cost had increased due to the costly coffee raw materials for these companies, causing the prices of their branded coffee products to rise. Now due to the fall in prices, they will be able to keep their cost under control and can provide products at better prices to consumers.
future prospects
Experts believe that coffee prices may stabilize between $ $ 2 to $ 2.50 per pound in the coming 12 to 15 months. However, meteorological risk such as low rainfall or excessive heat production in Brazil can affect and bring prices fluctuations.