INTRODUCTION

Expect the unexpected is a trite, overplayed statement that takes on something of a Barnum Effect—vague and timeless enough to always feel apt, no matter where or when it’s uttered.

And yet… the past year in coffee economics has perhaps upended even this, with such disparate disruptors and rampant volatility that the formerly vapid notion of expecting the unexpected now feels too hubristic to fit. More earnestly: 2025 proved that one can be shocked, again and again, long after we’ve reached herd immunity from surprise.

This was a year that began with the highest nominal arabica futures price in the history of the ICE Coffee “C” contract—then produced a 55% correction, a swift partial recovery, and long stretches in which intraday moves exceeded what may have often been considered a “volatile week.” Every stakeholder in the value chain—farmers, cooperatives, mills, exporters, importers, roasters, and lenders—found themselves navigating a market that reached historical levels both for costs and sheer uncertainty.

From macroeconomic tightening in the form of transient tariffs to looming regulatory upheavals like the EU Deforestation Regulation (EUDR), 2025 offered an exceptionally vivid snapshot of a [coffee] world that was already under multiple kinds of pressure, but that saw all of these forces ratchet into unavoidable public consciousness like never before.

What follows here is less an attempt to make sense of it (ha!), and more of a collective sigh to acknowledge that—in spite of it all—we’re still here, still learning, and still supporting the partners that make these supply chains so special.

Without An Anchor

2025 began with an extraordinary number: 430¢/lb. It was February when the C touched that level, setting that afore-mentioned nominal record for arabica futures. The move reflected years of tightening certified stocks (a steady decline in the Intercontinental Exchange-approved deliverable inventory that acts as the market’s safety cushion), along with erratic weather in Brazil, rising production costs, fragile logistics, and an increasingly speculative macro economic environment—thanks in no small part to the return to office of a particularly finicky POTUS.

The “C” in Three

In an attempt to somewhat simplify the year’s macro-market behavior into phases, we’ll first break the market’s behavior into thirds, further unpacking each section down below:

Act I — The Climb (January–March)

The year began with the C surging from the mid-300s to over 430¢. Certified stocks—the exchange’s pool of real, deliverable inventory—were near multi-decade lows, Brazil’s early crop outlook was clouded by irregular rainfall, and speculative buying across a wider range of agricultural commodities pushed futures even higher. Many roasters hustled to secure forward coverage at historically high levels, while many producers deferred sales in anticipation of further increases. Cumulatively, it’s fair to say that this period was more a product of perceived scarcity than confirmed shortfall—a familiar hallmark amidst fear-driven rallies.

Act II — The Correction (April–August)

But as harvest expectations in Brazil improved, speculation thinned. By July, the C had collapsed to around 277¢, a level that may have felt “cheap” relative to the February high, but that remained historically expensive compared to pre-2021 norms. Many roasters that hadn’t already overcommitted took advantage of the dip to secure further forward coverage, thereby squeezing exporters: those who had bought cherry or parchment at peak local prices faced shrinking margins or outright losses unless differentials adjusted—which they often didn’t.

Act III — The Plateau (September–December)

By early September, the market had climbed back toward the upper 3’s and low 4’s, revisiting levels roughly in line with the year’s initial peak. Concerns over Brazil’s flowering rains, persistently low certified stocks, and renewed macro volatility (much more on that to come) all fed the rebound. Through Q4, prices held in a tight, elevated band—not quite the frenzy of the past winter, but still tense.

The central takeaway from this broad strokes portrait is not fixation (pun acknowledged) on the highs or lows, but that there was no stable reference point for the market all year.

Macro Backdrop: Expensive Money & Trade Friction

Beyond the supply-and-demand mechanics, 2025 was shaped by macro-economic forces that hit just about every sector, manifesting in coffee as conspicuously as anywhere.

High Interest Rates and Tight Credit

Global lending conditions remained tight throughout 2025. Even as major central banks cut rates, real borrowing costs stayed elevated, especially in emerging markets. This had several knock-on effects.

Exporters struggled to finance parchment and cherry purchases. Traditional short-term credit—once a reliable tool for origin-side actors—became either prohibitively expensive or simply unavailable. Cooperatives with weaker balance sheets faced liquidity crunches, pushing some to sell early, accept unfavorable terms, or reduce pre-financing to farmers. Importers absorbed more financing risk as delays, narrowed fixation windows, and larger working-capital demands became the norm.

This is also where the role of hedging sharpens. In theory, hedging is how exporters and importers use futures contracts to lock in the value of a container while the physical coffee is still being purchased and processed. In practice, however, formal hedging has become inaccessible for most small and mid-sized exporters. It requires Intercontinental Exchange accounts, dedicated risk management, and—critically—significant cash deposits referred to as margin.

In 2025, those margin deposits just about doubled: requiring roughly $6,600 per container in 2024, and closer to $12,700 as ring in 2026. That means exporters who can hedge must tie up far more working capital at the very moment lenders are tightening advance rates. When credit contracts and margin requirements rise in tandem, hedging flips, becoming more of a barrier, with volatility cutting sharply into real operations as fewer actors have the capacity to insulate themselves from it.

To state it plainly: financing the same physical coffee today requires three to four times the capital it did before the pandemic, yet most importer margins—at least ours—have remained the same. Although these conditions aren’t new (they began building in the immediate post-Covid cycle), they have only intensified through the present. Coffee is capital-intensive at every stage from harvest to export, and expensive money means expensive coffee regardless of cup score or provenance.

Tariffs and Trade Policy Uncertainty

Tariffs may be the ominous overarching tagline of this entire year in economics—even if we seem to be bookending the year without them. As we all recall:

In early April 2025, the U.S. announced sweeping “reciprocal tariffs” covering most imported goods, including many agricultural and food products. The announcement on April 2, followed by implementation beginning April 5, created immediate uncertainty across global supply chains—especially those tied to U.S.–Asia shipping routes. Even though green coffee was not directly targeted, the policy’s breadth implied that categories could shift at any moment, prompting exporters, logistics partners, and roasters to rethink freight planning, forward coverage, and contractual exposure.

Snapping to mid-November, however, more than 200 food products—including coffee—were formally exempted when the administration rolled back much of the April tariff package. But by that point, plenty of damage had already been done: considerable sums of tariff dues had been paid, and months of ambiguity had delayed shipments, reshuffled routing decisions, and increased the cost of risk management.

Several coffee-producing countries also enacted internal tariff adjustments or VAT reforms (value-added tax rules applying to inputs, processing, export transactions, or the businesses handling coffee) that changed the underlying cost structure for exports everywhere. These domestic policy shifts—ranging from transaction taxes to revised import duties on fertilizers, fuel, and packaging—further complicated price discovery and squeezed margins at origin.

Currency volatility amplified all of this. The Brazilian real, which strengthened sharply in Q1 before weakening mid-year, magnified the impact of each tariff announcement or threat. For buyers and sellers on both sides of contracts, FX is yet another layer of friction, altering local cherry prices, exporter liquidity, and the dollar value of differential commitments.

Though they did amass a significant raw cost (exceeding $400,000 in our case) tariffs were foremost a destabilizing variable this year—another reminder that coffee’s economic environment can be shaped as much by politics as by supply, demand, or futures speculations.

Shipping, Geopolitical Tension, and Cost Volatility

Shipping rates—sporadically rumored as having some potential to normalize this year—did no such thing. Instead they oscillated sharply as continued Red Sea disruptions forced rerouting, congestion snarled key Southeast Asian ports, fuel markets swung unpredictably, and container shortages re-emerged in several exporting regions. Each of these pressures compounded the others, creating a logistical environment in which even well-planned shipments could be delayed, repriced, or reshuffled with little warning. For producers and exporters already navigating higher borrowing costs and an erratic market foundation, freight instability became yet another layer of risk—one that neither futures curves nor differentials could adequately account for.

Despite how universal these pressures were, they landed unevenly across the supply chain—nowhere more acutely than among the producer groups we tend to work with: remote smallholders operating in fragmented associations or small cooperatives. These communities have neither the liquidity nor the buffer to ride out violent price swings or chase rising cherry prices when markets turn erratic. That exposure creates two core gaps: the financing required to move coffee from cherry to parchment and from parchment to export-grade green, and the technical support needed to consistently meet quality expectations amid these shocks. Our sourcing model—built around pre-crop financing, cost-plus contracts, and long-term investment in farm-level capacity—is the mechanism we believe can fill that gap. In a year characterized by expensive money and unstable conditions, those tools were the only reason we and our partners could stay ahead of volatility.

Brazil

Even in a year with noise cascading from every direction, Brazil remained squarely at the intersection of coffee fundamentals and geopolitical theatrics. Beyond just the usual suspects of weather and forecasted yields, Brazil became central to the global tariff chaos as well.

When the U.S. rolled out its sweeping “reciprocal tariff” program in early April, Brazil—at 50%—was slammed. Coffee was not in the initial wave of tariffed goods, but the policy environment stifled any notions of assurance. And indeed, as the administration expanded and clarified its tariff lists in the months that followed, coffee was formally swept in—only to be pulled back out again during the mid-November rollback. The immediate effect, however, came long before any exemption: the prospect that Brazil—the world’s largest coffee exporter and a pillar of U.S. imports—could face even temporary tariff exposure was enough to trigger rerouting strategies, mass contract revisions, and a broad cooling of appetites for forward risk across trading desks. Even after the mid-November rollback and coffee’s formal exemption, the damage lingered, with months of policy whiplash having already introduced friction into freight pricing, container allocation, and exporter liquidity planning.

Meanwhile, the fundamentals were by no means calm. The year opened on the back of lingering confusion from the previous season’s irregular rainfall, leaving agronomists divided and traders bracing for either feast or famine. Mid-year, thankfully, was more forgiving: yields in several regions quietly outperformed expectations, contributing to the C’s fall from February’s record highs to July’s comparative lows.

But consensus seldom holds for long in Brazil. Flowering season arrived with poorly timed rains that—while not catastrophic—were bad enough to reignite anxiety in a market already hypersensitive to the weather. At the same time, internal conditions deviated from any clean model. Local cherry prices rose on domestic competition, making export purchasing harder than the C might suggest, and the real (Brazil’s currency) strengthened in Q1, weakened mid-year, and rebounded thereafter, constantly complicating the math.

As we know, Brazil’s market is both very big and deeply complex—driven by weather, labor, FX, domestic demand, and political blustering. In 2025, Brazil may not have been the source of the biggest surprises, but perhaps nowhere felt their effects more acutely.

EUDR: (Another) Looming Giant

Though tariffs dominated the headlines, the EU Deforestation Regulation continued radiating in the periphery. Even with enforcement timelines debated, softened, or reinterpreted throughout the year (continuing to be modified as recently as a few days ago, on the 5th of December), EUDR cast a bureaucratic shadow long enough to reach every producing country, co-op, exporter and importer.

At its core, EUDR demands something coffee has never had to produce at scale: plot-level traceability and verifiable proof that no deforestation occurred for the sake of production after December 31, 2020.

For some producers, this is an administrative headache, but for many more, it is far more severe. Much of the world’s coffee is grown by smallholders whose farms are irregularly shaped, unmapped, part of agroforestry puzzles, or recorded only in paper ledgers, if recorded at all. Even the act of creating a digital footprint for a farm introduces cost, labor, and the risk of misunderstanding.

As this look-back has already made exceedingly clear, 2025 was a particularly brutal year to ask a supply chain to invest in new administrative infrastructure. And that burden falls heaviest in the kinds of supply chains where we most often work: fragmented networks made up largely of underrepresented farmers—communities pushed upslope over generations and now operating at the very edges of market access. For them, these tech-driven compliance aspirations are prohibitively formidable, regardless of how rosy the aspirations may be.

Still—it’s not so difficult to perceive the desired big-picture upside: verified, fully traceable, deforestation-free coffee should command preference (and premiums) in markets where compliance becomes mandatory. The asymmetry, however, is glaring, with the path to compliance steepest for the producers least equipped to make the climb.

Differential Discrepancies & the Myth of the ‘High-Price’ Harvest

Central American differentials remained firm even as the futures market softened mid-year, reflecting constrained supply and higher production costs. Colombia stayed elevated, squeezed by labor dynamics, weather disruption, and peso volatility. Ethiopia softened only briefly as new trading structures took shape, and Kenya’s diffs remained stubbornly high as availability stayed thin—to name just a few.

Brazil’s differentials, meanwhile, blazed their own trails—often behaving independently from what shifts in the C or currency alone might predict. Above all, differentials in 2025 were shaped by origin-specific cost structures and supply conditions.

In practical terms, this meant the numbers were telling one story while production on the ground may have borne another—and the gap between those stories was frequently where margins were made or lost, with the deepest discrepancies surfacing upstream. Viewed from the farmgate, even a “high-price” year looked markedly different from expectation. If anyone looked only at the futures chart, they might imagine 2025 as a year of unexpected windfall for farmers—and to a degree, farmer income was up across many origins. But that rise was uneven, incomplete, and often inaccessible at the farmgate.

Local cherry and parchment prices are set in local currency and carry built-in discounts for capital scarcity, risk, and the cost of doing business. As a result, farmgate prices do not automatically climb at the same rate as the C. And because market “strength” in 2025 collided directly with a shortage of capital, most farmers were unable to fully capitalize on the run-up. Many sold cherry or wet, unsorted parchment earlier than they wished—not because it was the optimal moment qualitatively, but because it was when cash was available. Faster payment usually meant lower value, and for many growers the opportunity to capture the “high-price” market never materialized.

Costs, meanwhile, also rose unevenly. Fertilizer, fuel, and agrochemicals remained well above pre-pandemic baselines; labor shortages drove up picking costs or compressed harvest windows, weather volatility amplified crop risk, and currency movement frequently undermined nominal gains. The weight of these costs varied widely—strong cooperatives, well-resourced exporters, and effective government programs blunted the impact in some regions, while weaker or less mature structures left many farmers even more exposed.

2025 reinforced a concept that many of us know fairly well, but that still isn’t amplified loudly enough: a rising market is not the same as rising margins. Even in a “high-price” year, many farmers had little chance to benefit from the prices the charts seemed to promise.

WITHOUT A MAP

Exporters entered 2025 already managing a multi-year accumulation of structural costs—labor, transport, energy, compliance—and then watched the financial scaffolding beneath come apart plank by plank. Hedging costs spiked. Local price behavior largely decoupled from the C. Shipments delayed by tariffs or freight rerouting created cash-flow gaps that smaller exporters struggled to absorb.

Importers faced their own squeeze: fixation windows narrowed, margin requirements ballooned, FX volatility sliced into well-timed purchases, and many roasters became more cautious, reducing forward exposure and leaning harder on spot or short-term contracting. In an environment where the benchmark itself felt unstable and the cost of managing risk rose faster than the value of doing so, the industry leaned more heavily into differential-based contracting.

Roasters, for their part, were navigating one of the most challenging cost environments in recent memory. Record and volatile green coffee prices—buoyed by supply disruptions, tariff impacts, and persistent inflationary pressures—compressed already thin margins across green coffee, packaging, energy, and labor, forcing delayed payments, tighter terms, and strategic reshuffling of purchasing practices. The collapse of robust spot menus and reduced availability of both volume and variety of samples meant many roasters were effectively paying more for the same or lower quality coffee, and in some cases were asked to secure supply on SAS-NANS terms for the first time. These pressures, felt from sourcing through to retail pricing, underscored how 2025’s cost dynamics impacted every link in the value chain, requiring each actor in the supply chain to rethink sourcing and contracting strategies in collaboration.

TYING IT TOGETHER: OUR APPROACH

No matter how volatile the New Normal may prove to be, responsible supply chain actors need to ask these sorts of questions—how can we build better tools? Better agreements? Better hacks?

For us, answers have come in the form of doubling down on transparency, predictability, and the kinds of structures that create more distance between producers and the market’s worst impulses. One example is our ongoing push toward 20-day moving-average fixation, a simple mechanism that mitigates the drama of daily closing prices with a smoother, more representative benchmark. It removes the need for perfectly timed decisions, eases fixation anxiety on both sides of the contract, and anchors purchasing more tightly to the real costs of moving coffee.

Where volatility is highest, we’ve leaned even harder into max-price, cherry-plus cost-plus models—structures that extend cost-plus all the way to the farmgate and are built around a simple promise: the farmer’s price moves when real local cherry prices move, not when global speculation does. These contracts start with verified production costs, add a fixed margin, and then incorporate a transparent adjustment band tied to local cherry competition and FX. When cherry prices rise beyond that band, we do not automatically increase the contract price; instead, we seek buyer approval to raise the max price. If approval isn’t granted, we simply collect whatever volume can be purchased at or below the agreed ceiling and process and export that—typically at a lower overall cost, since we aren’t paying for supplier-risk buffers. The trade-off is that roasters may be asked either to accept reduced volume or to raise the max price, but in all cases they can be certain they’re not paying for fluff. This shared rule set keeps producers protected in competitive markets, shields exporters from being caught between local arbitrage and fixed contracts, and ensures roasters don’t absorb unbounded spikes disconnected from quality or availability. In places like Uganda, this has been the single most important mechanism keeping purchasing orderly through what would otherwise have been a destabilizing season.

And finally, because forward risk has become so much harder to manage, we are preparing to launch a Buyer’s-Call Extension Service for full-container customers in 2026—a small, optional fee that converts seller’s-call contracts into buyer’s-call within a defined window. It preserves the cost structures producers and exporters need, while giving roasters the ability to fix on a day that aligns with planning rather than panic.

None of these tools eliminate volatility—that’s simply not something that we can, in earnest, aspire toward. But what we can improve upon is a framework for participating in volatile markets without being ruled by them, allowing producers to plan, exporters to finance, and roasters to buy without total tethering to the market’s most theatrical moments.

ONWARD!

If 2025 deserves anything, it’s a place in the industry’s collective time capsule—a year so wild, so structurally strange, that many of us may remember exactly where we were when certain prices flashed on our screens or certain policies were implemented (or revoked). We learned a great deal—about our partners, about our own operations, and about the resilience that emerges when every link in the chain is tested at once. And perhaps most importantly, none of this was experienced in isolation. If you made discoveries of your own this year—about risk management, about sourcing, about the tools you now trust or no longer trust—we’d genuinely like to hear them. Feel free to reach out; part of documenting a year like this is acknowledging that we all weathered it together, and many of us came out of it with tighter systems, deeper relationships, and a clearer sense of how to build toward whatever comes next.

Looking forward, we remain committed—through cost-plus baselines, through relationship-forward contracting, through steady experimentation—to cultivating as much calm as possible amidst all the chaos. Here’s hoping (but by no means expecting) a far less interesting year in 2026!