Global Coffee Squeeze Threatens to Lift Portugal Café Prices

The next time you order a quick bica at the counter, do not be surprised if the price sticker looks different. Behind every cup sold in Lisbon, Porto or Faro lies a global drama that pushed the composite international coffee index up 9.3 % in September, the sharpest monthly jump in nearly a decade. A cocktail of crop damage, low warehouse stocks and financial jitters has tightened supplies just as European demand holds steady, leaving Portuguese roasters scrambling for beans and cafés debating whether to absorb or pass on the extra cost.

Why the Espresso Might Cost More This Winter

Cafés in Portugal buy roughly 90 % of their raw coffee through long-term contracts that price off the New York and London futures exchanges. When those benchmarks climb, invoices for Torrefacções de Portugal, Delta Cafés or any neighborhood roastery rise in lock-step, although the consumer often feels the impact a few months later. Industry executives say the latest surge could lift the retail price of a kilo of ground coffee sold in supermarkets from €13 to €14–€15, while a standard cimbalino at the bar may edge from €0.70 to €0.75 or €0.80 in the first quarter of 2026. That matters in a country where, according to Eurostat, households spend almost the same on coffee as on bottled water.

A Perfect Storm Hit the Plantations

The supply squeeze began in Brazil and Vietnam, the powerhouses that account for more than 55 % of world exports. Prolonged drought in Minas Gerais and Espírito Santo reduced the 2025 Brazilian arabica crop by an estimated 4.4 %, while heat waves sapped flowering potential for the 2026 harvest. In Vietnam, typhoons Ragasa and Bualoi tore through the Central Highlands, flooding roads and plantations already weakened by a two-year dry spell that had sliced robusta output by one-fifth. Colombia, meanwhile, suffered excessive rains linked to La Niña, likely trimming 1 M to 1.5 M 60-kg bags from the coming season. With origin warehouses emptying fast, the International Coffee Organization (ICO) reports global inventories at their lowest since 2011, triggering a classic price spike as importers fight for remaining lots.

Thin Stocks, Heavy Bets

Low physical stocks have a magnetic effect on speculative money. Hedge funds entered September with their largest net-long position in arabica futures in two years, betting that shortages would deepen. When prices raced toward 330 cents per pound, the Intercontinental Exchange ordered two successive margin hikes, forcing some investors to liquidate. Volatility exploded: contracts swung 13 % in five trading sessions, and certified stocks in ICE warehouses fell another 171 000 bags. The turbulence travelled to London, where robusta for November delivery gained 4.7 % in early October, widening the premium paid by instant-coffee manufacturers—many of which supply the Portuguese retail market.

Winners, Losers and the Iberian Peninsula

High prices are a double-edged sword. Brazilian and Colombian farmers fetching 30 % more per sack are enjoying better revenue, but exporters face a new 50 % US tariff that is pushing them to seek buyers in Europe and China. That rerouting could benefit Portuguese importers who specialize in Brazilian milds, provided they lock in freight early—shipping a container from Santos to Sines now costs $4 200, double the 2023 average. African growers, especially in Uganda and Ethiopia, are seizing the opening left by Vietnam’s short crop, yet lack of financing hampers their ability to scale sales quickly. For Portuguese wholesalers, sourcing diversified origins has become vital to maintain the beloved blend of arabica sweetness and robusta crema without breaking the cost ceiling.

Looking Ahead: Will Relief Arrive Before 2027?

Forecasts diverge. The ICO warns that meaningful relief may not come until new plantings mature in 2027, while analysts at Trading Economics see arabica touching 440 cents/lb by late 2026 if extreme weather persists. Others, including a recent Reuters poll, expect a correction of up to 30 % next year should Brazil’s 2026/27 crop rebound. Currency moves add another layer: a stronger real tends to lift dollar-denominated prices but can simultaneously improve Portuguese import terms if the euro gains ground. All eyes therefore turn to the Florada—the critical Brazilian flowering period in October and November. Clear skies could send futures tumbling; one more drought could push them to fresh records.

What to Watch From Portugal

Two policy shifts loom large. First, the EU’s new deforestation-free supply chain regulation, set to bite in December 2025, will require roasters to certify that every bean was grown on land untouched since 2020. Compliance costs may add €0.10–€0.20 per kilo but also favor Portuguese companies that already audit farms. Second, Lisbon’s government is weighing an extension of the IVA zero programme beyond basic foods; coffee is not on that list, yet lobbyists argue that including it could soften inflation for households. Until those decisions land, consumers might do well to expect that the modest pleasure of a short espresso will reflect the long journey of a bean through droughts, storms and trading pits before it reaches the Portuguese cup.