Historically high coffee prices are creating what Illycaffe chairman Andrea Illy describes as a “delicate situation” for the global coffee market, as record production forecasts in Brazil collide with mounting climate and geopolitical risks. Speaking in Sao Paulo on 7 May 2026, after meeting Brazil’s agriculture minister, Illy warned that today’s price environment could sow the seeds of both future surplus and shortage.
According to a briefing reported by BusinessWorld Online (Reuters), arabica coffee futures touched an 18‑month low of $2.7280 per pound on 7 May, but remain elevated compared with the past decade. Separate coverage in Valor International cited international coffee prices averaging $3.68 per pound in 2025, three times the historical average.
“We are also experiencing a scenario of historically high prices; this creates a delicate situation,” Illy said in Sao Paulo, as quoted by BusinessWorld Online (Reuters). “There is a risk of excessive production expansion and future price crises, as well as the opposite risk of reduced supply caused by extreme weather events.” He described the challenge as balancing these opposing threats.
On the supply side, Brazil’s government expects a record crop. The same BusinessWorld Online (Reuters) report said official projections for 2026 total coffee production (arabica plus robusta) stand at 66.2 million 60‑kg bags. Illy told reporters he also expects a bumper Brazilian harvest, citing arabica’s on‑year in the biennial cycle and improved weather conditions.
Higher prices are already changing behavior at farm level, according to Illy’s recent visits to Brazilian coffee areas. “We observed a greater number of new crops, a consequence of higher and more attractive prices for increasing production,” he said, as reported by BusinessWorld Online (Reuters). He argued that this expansion, if not carefully managed, could later depress prices.
At the same time, elevated green coffee costs are weighing on roaster profitability. Valor International reported that Illycaffe’s net profit fell 39% in the past year to $20 million, which Illy linked directly to higher green coffee prices. Discussing the company’s commercial response, he described Illycaffe’s pricing strategy as “an arbitrage policy we chose, a very prudent one, that is delivering excellent sales and volume results. We raised prices in proportion to costs.”
Beyond prices and production, Illy highlighted a web of vulnerabilities tied to geopolitics and climate. Coverage in Valor International noted that fertilizer costs have increased sharply during the Iran war, which has closed the Strait of Hormuz, a strategic route for fertilizer trade. BusinessWorld Online (Reuters) reported that Brazil imports about 85% to 90% of its fertilizer needs, making these disruptions particularly significant for the country’s coffee sector.
“Climate change is already directly affecting productivity, costs, and production predictability. Geopolitical issues affect input prices and logistics. The challenge is ensuring consistency [in production],” Illy told Valor International. He added that mineral fertilizers have become more expensive, but are being used less in coffee farming thanks to regenerative agriculture practices.
Amid these pressures, Illy pointed to signs that Brazilian coffee farming is becoming more resilient. According to Devdiscourse, Brazil is improving its capacity to face extreme weather through more resilient coffee varieties and better agricultural practices. Illy said this “highlights the need to increase efficiency, productive autonomy, and resilience in the field,” arguing that resilience now also means producing “with less dependence on extreme scenarios,” as reported by BusinessWorld Online (Reuters).
