Sep 15 / Laleska Moda

Tariff Effect: Brazilian Coffee Exports down from 2024

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  • Brazilian coffee exports totaled 3.1 M bags in August. Although this figure was higher than in July, it was still below levels seen in August 2024 and the average. The drop was expected due to record exports last year, a smaller Brazilian crop in 25/26, and a lack of Brazilian sellers. This has led to a drop in exports to main destination in this cycle.

  • However, the results also reflected the current 50% tariff on Brazilian coffee imposed by the US. Total exports to the country in August dropped 46.4% compared to 2024 and 48.6% compared to the five-year average for the month. Both Arabica and Conilon exports reduced significantly from last year.

  • The reduced volume of Brazilian exports to the US continues to support prices due to the expectation of a drop in American stocks. The decline in certified stocks persists, further reinforcing the short-term tight supply.

Tariff Effect: Brazilian Coffee Exports down from 2024

Coffee future prices continue to rise, mainly supported by Brazilian exports data from August and the short-term supply worries. According to Cecafé, although higher than July, shipments totaled 3.1 M bags in August, a drop of 17.5% in one year. In the 25/26 cumulative (Jun-Aug) there was a reduction of 24% from 24/25. Cumulative Arabica exports are 19.4% down from 24/25, with a total of 6.07 M bags in the season. Robusta shipments totaled 1.55 M bags until August, a decrease of 41.7% from the same period of the past cycle.

Lower exports were expected this year due to lower Arabica production in Brazil, farmers' lack of interest in new sales, and the fact that 2024 was a year of record shipments. This has also led to a reduction of shipments to most of the major destinations for Brazilian coffee, such as the EU and the US, although Japan has increased its imports of Arabica and Conilon coffees from Brazil.

Brazilian Exports: Arabica (M bags)

Source: Cecafé

Brazilian Exports: Conilon/Robusta (‘000 bags)

Source: Cecafé

In the case of the US, the current 50% tariff on Brazilian beans also intensified the movement, as stated by Cecafé last week. Brazilian exports to the US in August totaled only 301.09 K bags of coffee, a drop of 46.4% from last year and way below average shipments to the US.

Arabica exports to the US totaled 244.7 thousands bags in the past month, a decrease of 49.5% from 2024, while Conilon shipments, were down 75.1% in the same period, with only 9.5 thousands bags. The performance is also way below average export figures for the country. Cumulatively, Brazil’s shipments to the US are also below 2024 and average figures, with total volume at 1.1 million bags in 25/26 (Jun-Aug), down 26.3% from the 1.6 M bags of 24/25.

Brazilian Coffee Exports by Destination: Arabica (M bags)

Source: Cecafé

Brazilian Coffee Exports by Destination: Conilon/Robusta (‘000 bags)

Source: Cecafé

The recent reduction in Brazilian coffee exports to the US is expected to result in a decline in domestic stocks. Although rising prices may dampen American demand, lower stocks in the country amid the off-season of other Arabica-producing origins increase the risk of a supply shortage, which is supporting prices. Additionally, certified stocks continue to decline (see report), further reinforcing the tight short-term supply.


Meanwhile, persistent dry conditions in Brazil are delaying the flowering of the 2026/27 Arabica crop. Forecasts suggest rainfall may not return until late September, and concerns over a potential La Niña event between October and December are adding uncertainty to the next production cycle.

These factors are contributing to elevated price volatility, with funds increasing their long positions. This has also led to the December Arabica contract coming back to the 417 c/lb this Monday, 15.


Brazilian Total Exports to the US (‘000 bags)

Source: Cecafé

Tariff Effect: Projection of Total Brazilian Exports to the US (M bags)

Source: Hedgepoint

Despite the current challenges, a price correction in the medium-term remains possible, particularly for Brazilian domestic prices and differentials. First, flowerings in Arabica areas remain minimal, with little impact from the lack of rain for now. Therefore, if precipitation levels are closer to average from the end of September onward, there is still the possibility of a higher Arabica production in the next cycle, while Conilon outlook remain positive for the 26/27 cycle.

Additionally, although Brazil’s Arabica output for 25/26 is lower, the decline in exports - particularly to the US - suggests a short-term build-up in domestic inventories. If this trend continues, surplus coffee that would have otherwise been exported may remain in the local market, increasing availability over the coming months and potentially pressuring Brazilian differentials.

This scenario, however, remains dependent on the weather outlook in Brazil and changes in the current US tariffs on Brazilian coffee. In this context, any shifts in trade tariffs or weather conditions could lead to significant price fluctuations, for up or down, as the market continues sensitive to supply.

In Summary

Coffee prices remain highly sensitive to changes in the supply outlook. Currently, the short-term outlook is still bullish, particularly given the anticipated decline in US coffee stocks. American tariffs of 50% on Brazilian beans are already impacting Brazil's export figures to the US, resulting in a significant drop in August. Brazilian exports are generally lower than in 2024.

Although a drop in shipments for the 2025/26 season was expected due to a smaller crop, current uncertainties are reinforcing the retraction of Brazilian farmers from the market, which continues to contribute to the short-term supply shortage, especially since most other origins are in their off-sea.

However, a price correction in the medium-term remains possible, particularly for Brazilian domestic prices and differentials. This scenario, on the other hand, remains dependent on the weather outlook in Brazil and the future of the 50% tariff on Brazilian beans.

Weekly Report — Coffee

Written by Laleska Moda

laleska.moda@hedgepointglobal.com

Reviewed by Thais Italiani
thais.italiani@hedgepointglobal.com
www.hedgepointglobal.com

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