Domestic Coffee Market Trends: A Call for Regulation

The Ethiopian coffee market is increasingly shaped by speculative pricing, where decisions by suppliers and exporters are often made without sufficient alignment with global market trends. This growing disconnect has led to elevated domestic prices, putting Ethiopian coffee at a competitive disadvantage internationally—especially as global coffee prices trend downward.

As an illustration, on August 7, 2025, grade 4–5 coffees in Sidamo and Guji areas were priced locally at 14,800 ETB per feresula (approximately $2.88/lb at an exchange rate of 137 ETB/USD). Given the typical minus differential applied to Ethiopian coffee in the C market, such pricing poses challenges for maintaining export viability. If these dynamics persist into the upcoming coffee season, there is a real risk that exporters may face significant financial strain, potentially leading to contract defaults and affecting Ethiopia’s standing in the global coffee industry.

What Needs to Change

To maintain Ethiopia’s long-standing reputation as a reliable and competitive coffee origin, greater alignment between domestic pricing and global market realities is essential. We encourage stakeholders across the Ethiopian coffee value chain to consider adopting a more transparent and data-driven approach to pricing—starting at the farm gate and extending through to export. A system informed by real-time international market trends would help ensure price stability and predictability for buyers abroad.

Moreover, streamlining the domestic value chain by reducing excessive layers of intermediaries would not only improve cost efficiency for exporters and international buyers—it would also allow coffee farmers to earn more for their coffee. This is critical for ensuring the long-term sustainability of Ethiopia’s coffee sector and preserving the trust and confidence of international partners.

The Risk of Substitution

High local prices could drive international buyers toward alternative origins such as Colombia. Unless Ethiopian coffee is competitively priced, our share in the global market could shrink significantly. Unjustified speculation must be avoided in favor of informed decision-making.

Call to Action for Stakeholders

Governmental and private institutions must lead awareness campaigns about global coffee price trends. Better-informed stakeholders can adapt to market shifts and protect themselves from profit erosion.

Global Coffee Market Outlook

In our July newsletter, we anticipated upward pressure on prices due to weather risk in Brazil. However, recent developments in Brazil and Vietnam support bearish market.

While coffee prices rallied sharply on August 4, the surge was short-covering driven—triggered by below-average rainfall in Brazil’s top arabica-growing region, Minas Gerais, which received only 2.7 mm of rain (31% of the historical average) during the week ended August 2. Additionally, a stronger Brazilian real discouraged some exporters, further fueling the rally.

Despite this temporary spike, fundamentals remain bearish:

• As of July 30, Brazil’s arabica harvest was 85% complete, according to Safras & Mercado—supporting our analysis that most weather-related threats to the crop are behind us.
• ICE-monitored arabica coffee inventories fell to a 5.5-month low, which added to the rally on August 4, but this is likely to reverse with continued incoming supply.
• The Brazilian harvest, coupled with U.S. tariff uncertainty and increased global supply, all point toward continued downward price pressure in the coming months.

Price Trends

• End of July: Prices began to slide
• Early August: Temporary rally due to Brazilian weather and currency strength
• Outlook to December 2025: Prices expected to fall below $2.80/lb, driven by supply-side fundamentals

Global Coffee Supply Snapshot

Despite short-term export constraints, the broader market supports a bearish market for coffee prices.

• Brazil: 2025/26 harvest 90% complete (arabica 85%, robusta 98%)
• Global Supply: USDA projects a record 178.7 million bags for 2025/26, with a -1.7% decrease in Arabica production to 97.022 million bags and a +7.9% increase in Robusta production to 81.658 million bags. 
• Vietnam: Coffee production declined in 2023/24 but is forecast to rebound to 26.5 million bags for 2024/25. The 2025/26 coffee output will rise to a 4-year high of 31 million bags.
• ICE Inventories: Arabica stocks are tightening, but robusta stocks have reached a 1-year high.

Despite isolated supply concerns, total global availability remains high, supporting our projection of price decline through the end of the year.

KANYA Annual Meeting Highlights (28 July 2025)

KANYA Coffee Export held its annual strategy meeting, where we reviewed our 2024/2025 performance and outlined goals for the upcoming season.

2025/2026 Goals:

• Target Export Revenue: $4.3 million USD
• Planned Volume: 34 containers

New Infrastructure:

• Launch of a new station in Guji, Oromia
• Completion of our processing & bagging warehouse

These developments will enhance efficiency and traceability—supporting our commitment to quality and growth.

Final Thought

For Ethiopia to remain a competitive and trusted origin in the global coffee industry, a coordinated and market-responsive approach to pricing is essential. We believe all stakeholders—from producers to exporters—should be aligned with international market realities and equipped to adapt accordingly.

As mentioned, reducing excessive layers of intermediaries will not only improve pricing transparency and efficiency, but also ensure that coffee farmers receive a fairer share of the value. Equally important, the coffee sector must be guided by principles of commercial viability. Exporting coffee at a loss purely to access foreign currency ultimately distorts the market and puts long-term relationships at risk.

On our end, we remain committed to sourcing high-quality Ethiopian coffee and hope to see continued improvements that support a healthier, more sustainable, and globally aligned coffee sector.

Stay Connected

Visit us at: kanyacoffee.com
Email: export.manager@kanyacoffee.com