Record global coffee harvest set to reduce prices for consumers by second half of 2025

Brazilian consumers can anticipate more affordable coffee prices on supermarket shelves starting in the second half of 2025. This optimistic forecast, recently shared by the Secretariat of Economic Policy (SPE) within the Ministry of Finance, points to a confluence of factors creating a favorable market environment.

The projection hinges on a record-breaking harvest within Brazil, complemented by significant increases in production from other major global coffee-producing nations. This expansion in supply is expected to exert downward pressure on wholesale prices, ultimately contributing to a deceleration of coffee inflation throughout 2025.

This positive trend follows a period of market volatility, offering a welcome reprieve for household budgets. The combined efforts of global producers are seen as critical to stabilizing a market that has faced multiple challenges.

## Worldwide production boosts supply

The economic analysis indicates that the expansion of coffee supply is not an isolated phenomenon in Brazil. Experts highlight that other prominent global producers, including Vietnam, Indonesia, and Colombia, are also on track for substantial harvests. This synchronized increase in output creates a ripple effect across the international market.

Such a collective surge in production is crucial for alleviating the pressures currently observed in international coffee quotations. These prices have been sustained at elevated levels due to historically low global stock reserves. The replenishment of these reserves, driven by robust harvests, is a key component of the anticipated price moderation.

## Domestic market anticipates gradual relief

Locally, the most noticeable impact on coffee prices is expected in the latter half of 2025, coinciding with the peak period of the annual coffee harvest. However, consumers should prepare for a gradual transmission of these lower wholesale prices rather than an immediate change.

The record domestic harvest is projected to reduce wholesale prices significantly, especially from the second half of 2025 onwards. The pace at which these savings reach the consumer will depend on several economic variables, primarily the evolution of the exchange rate and the volume of coffee exports.

## Industry eyes stable outlook amid past challenges

Representatives from the coffee industry echo the sentiment of a more predictable market ahead, a stark contrast to the preceding two years. The period from 2023 to 2024 was characterized by significant climatic disruptions, insufficient production volumes, and critically low stock levels, leading to considerable price volatility.

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The Brazilian Coffee Industry Association (Abic) has expressed confidence that a better harvest coupled with more stable climate conditions in 2025 will help balance supply and demand. This equilibrium is expected to reduce the abrupt price fluctuations consumers have experienced at the retail level. Abic notes that despite a broader trend towards stabilization, minor price variations will continue to occur across the supply chain. For instance, between November and December of 2025, the average price per kilogram for Traditional and Extra Strong coffees saw a reduction of R$4.58, a movement largely attributed to raw material costs during that period.

## Macroeconomic currents and export dynamics

The improving outlook for coffee prices unfolds within a broader context of decelerating general inflation. A macroeconomic analysis released earlier in 2025 projects that the broad consumer price index (IPCA) is expected to decline from 4.3% in 2024 to approximately 3.6% in 2025. Despite this overall trend, the report acknowledges the possibility of moderate price pressures on food items throughout the year.

Despite the continued attractiveness of exports due to firm international prices, government analysts do not foresee a new process of domestic price increases linked to the dollar’s value, nor do they identify a significant risk of internal supply shortages. They indicate that domestic prices already incorporate international benchmarks and export parity as standard price-setting mechanisms. Additionally, the Brazilian real has previously experienced greater depreciation than its current level, and an increase in production volume is also anticipated in other major coffee-producing countries.

## Agribusiness GDP poised for positive boost

With enhanced productivity in the coffee sector, the increased output is anticipated to positively contribute to the performance of the agribusiness sector in 2025. While the overall growth projection for agribusiness may be lower compared to the robust expansion observed in 2024, coffee’s contribution will be notable.

The Ministry of Finance’s official projection for agribusiness GDP in 2025 forecasts an increase of around 0.5%. This follows a particularly strong performance in the previous year, which saw an impressive advance of 11.3%. The positive impact from coffee production is expected to be more concentrated in the second and third quarters of 2025, periods when the crop significantly influences the sector’s activity dynamics.

## Production costs may temper consumer savings

Despite the encouraging supply forecasts, the secretariat is closely monitoring the behavior of production costs. These expenses have the potential to moderate the impact of a larger harvest on consumer prices and could affect producers’ profit margins.

Specifically, the evolution of production costs, particularly for fertilizers, remains a key concern. After experiencing a decline in wholesale prices during the second half of 2024, fertilizer costs began to rise again in early 2025. Should this upward trend consolidate, increased costs for producers could limit the expected drop in consumer prices resulting from higher coffee supply. The final extent of any price reduction will depend on the magnitude of productivity gains, the overall scale of the harvest, and prevailing commercialization conditions in both domestic and international markets.