Will coffee prices increase even more in 2025?

Coffee lovers have seen prices of the hot beverage skyrocket due to extreme weather conditions in Brazil and Vietnam over the past months.

The increase in coffee prices has benefited East African producers, with Uganda’s coffee exports reporting an increase of 60.3% in 2024.

However, the future of coffee prices is uncertain, with some analysts predicting a rise and others a decline.

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Theo Klein, economist at Oxford Economics Africa, said regardless of price movements, adverse weather conditions pose a risk to both the quantity and quality of this year’s coffee harvests.

Weather in Uganda

He added that increased coffee prices relieved the East African nations after a prolonged drought. However, this year, adverse weather conditions threaten to reverse those gains.

According to the Uganda National Meteorological Authority, in February, Uganda recorded its highest-ever temperatures (above 40°C).  

“Given that coffee plants thrive within specific temperature ranges – 18°C-22°C for arabica and 22°C-26°C for robusta – these elevated temperatures likely damaged crop yields towards the end of Uganda’s primary harvesting season (October 2024 to February 2025).”

Other East African countries

Klein added that other East African producers, especially Rwanda and Kenya, are also at risk.

“The IGAD Climate Prediction & Applications Centre has projected dry conditions across parts of Rwanda and Kenya between March and May.

“This poses downside risks to Rwanda’s (April to September) and Kenya’s (June to August) harvests.”

He said dry conditions are also expected in Ethiopia, but since the country’s main coffee harvest only occurs later this year (October to December), the risk to exports remains limited for now.

Coffee prices in 2025

Klein added that on the price front, the Food and Agriculture Organisation (FAO) warns that persistent climate-related disruptions could push global coffee prices even higher in 2025.  

However, Reuters anticipates a potential price drop by year-end.

“A sustained price rally could offset production declines for East African exporters, but the region’s coffee revenues will suffer if prices fall alongside weaker harvests.”

Coffee exports

He added that risks to coffee exports include strict enforcement of the European Union’s (EU) Deforestation Regulation by the end of this year.

Although the EU sources most of its coffee from countries outside Africa, the EU is a sizeable buyer of coffee from Ethiopia, Uganda, Tanzania, Kenya, and Rwanda.

“Losing access to the EU market would, therefore, come at a high economic and financial cost to most East African coffee producers.

“However, East African countries can redirect coffee exports to other markets to avoid economic losses.

“Access to Eastern markets could be achieved with greater ease for Ethiopia and Uganda, which joined the Brics group in January and October last year.

“Also, Rwanda signed a new trade deal with China in September last year to commence coffee exports.”

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Brazil weather conditions

Klein said drought conditions and high temperatures in the world’s major coffee-exporting countries have been the leading drivers of the recent coffee price rally.

Brazil, the world’s largest coffee producer, is experiencing its worst drought in 70 years.

“The US Department of Agriculture expects Brazil’s coffee harvest to decline by 5.8% year-on-year in 2025, marking its fifth consecutive year of contraction.

“Other key coffee growers include Vietnam, Colombia, and Ethiopia. At the start of this year, adverse weather conditions hit Vietnamese coffee fields, one of the largest robusta producers – raising fears that international stockpiles will fall to a 25-year low.

“As a result, robusta coffee prices rose by an average of 68.5% year-on-year in the first two months of this year.”

East African coffee growers

He said Ethiopia, Uganda, Tanzania, Kenya, and Rwanda account for roughly 80% of the total coffee produced in Africa, with Africa representing about 11% of global coffee exports in 2022.

Among these countries, Ethiopia and Uganda are the leaders.

“According to the latest available data, Ethiopia’s coffee export receipts surged by 26.3% year-on-year to $854m in H1 2024, while Uganda’s coffee receipts soared by 60.3%, reaching $1.5 billion for the full year in 2024.

“Both Tanzania (+28.5% to $293 million) and Kenya (+14.7% to $287 million) recorded annual increases in their coffee export earnings in 2024.

“The broad-based rise in coffee receipts reflects a combination of strong coffee prices and a bumper harvest due to favourable weather conditions in the region.

“Contrasting to these positive trends, Rwanda’s coffee export revenues dropped by 32.1% year-on-year between June 2023 and July 2024 due to weaker volumes.”

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