Arabica coffee prices have dropped to their lowest level since the end of 2024, but there is a risk of further market shocks.

After news of a possible end to the war in Iran emerged, international coffee prices suffered a retaliatory drop, with Arabica coffee futures prices in particular falling into a "free fall" and hitting their lowest level since November 2024.

After the war in Iran subsided, the prospect of a strong recovery in Brazil's coffee production and the expectation of a future global coffee supply surplus became the main factors driving down coffee prices. However, in addition to these, new market shock risks still exist.

According to the remarks made by Andrea illy, the president of illy coffee, in Brazil, the current prices remain at a historic high, creating a delicate situation.

The coffee industry is at risk of future price crises due to overexpansion on the one hand, and at the same time, there is still the risk of reduced supply caused by extreme weather events. This means that coffee prices could drop sharply at any time in the future, or conversely, could rise again in a retaliatory manner.

In Brazil, the number of new plantations continues to increase, which is driven by rising prices and greater attractiveness, leading to an increase in production. Andrea Illy stated that this year Brazil will have an extraordinary harvest, thanks to favorable weather conditions and the large output cycle of Arabica coffee every two years.

However, he also warned of the risks brought about by the current geopolitical situation, which have exposed the fragility of the supply chain.

For instance, due to the war in Iran, the cost of fertilizers skyrocketed, causing significant problems for countries like Brazil. Brazil imports approximately 85% to 90% of its fertilizer requirements.

Therefore, enhancing the resilience of the industry is of great significance, which means improving the production capacity and reducing reliance on extreme scenarios.

In this sense, regenerative agriculture has significantly promoted the development of the Brazilian coffee industry by reducing its reliance on imported mineral fertilizers.