Why Brazilian Coffee Bean Prices Dropped to Record Lows

For years, coffee farmers in Brazil have struggled with limited warehouse space and falling prices—but in 2013, a sudden shift in the value of the Brazilian real triggered an unexpected wave of selling. As the currency weakened dramatically, producers rushed to offload stock before further losses, turning storage headaches into a financial opportunity.

Yes, Brazilian coffee bean supply surged and global costs dropped: in the first half of 2013, Brazil exported 20% more coffee than the same period in 2012—1.3385 million bags (around 803,000 metric tonnes)—just as the US dollar jumped 10.2% against the Brazilian real in Q2 alone.

The Real Crisis That Boosted Exports

Brazil’s currency, the real, plunged in value during 2013, creating a powerful incentive for local coffee farmers to convert their sales from dollars into rapidly weakening reais. With limited storage capacity and falling green coffee values, many chose to sell their inventories quickly—even at lower prices—knowing the currency exchange would soften the blow. This surge in supply began reshaping global coffee markets.

How Currency Impacts Global Coffee Costs

In Q2 2013, the US dollar rose 10.2% against the Brazilian real—the biggest quarterly gain since Q2 2012. As a result, Brazilian coffee became cheaper on the global market when priced in dollars. The country exported over 1.3 million bags in just six months, a 20% year-on-year increase, according to Brazil’s Trade Ministry. More supply meant downward pressure on international prices.

What Happened to Coffee Futures?

Arabica coffee futures, traded on ICE Futures US, had peaked in May 2011 at a 14-year high—but by 2013, they had fallen 61% from that peak. In the first half of 2013 alone, prices dropped 16%, settling at $1.214 per pound. Analysts surveyed by Bloomberg predicted prices would fall another 11% by year’s end, reaching $1.08 per pound, due to four consecutive years of global oversupply.

Starbucks and Big Food Respond

While coffee prices fell, major companies felt the impact. Starbucks’ stock defied broader US market weakness, rising 0.76% on July 3, 2013, to close at $67.30—the highest closing price since its 1992 IPO. The share price had climbed 25.49% for the year and showed five straight years of growth. Meanwhile, Kraft Foods hit a 2012 high of $57.54 on May 28 before easing back. Even J.M. Smucker Co. had cut the price of Folgers instant coffee in February 2013, and Starbucks reported higher gross margins in Q2 2013. Analysts forecast a 21% rise in Starbucks’ Q3 net profit.

Frequently Asked Questions

Why did Brazilian coffee farmers sell off their stock in 2013?

Brazilian coffee farmers faced limited warehouse space and falling prices. When the Brazilian real sharply depreciated against the US dollar in 2013, they chose to sell their stored coffee quickly to take advantage of better exchange rates when converting dollar-priced sales into reais, even as global prices dropped.

How much did Brazil’s coffee exports increase in early 2013?

Brazil’s coffee exports jumped 20% in the first half of 2013 compared to the same period in 2012, reaching 1.3385 million bags, equivalent to approximately 803,000 metric tonnes.

What happened to the US dollar vs. the Brazilian real in 2013?

In the second quarter of 2013, the US dollar appreciated by 10.2% against the Brazilian real, marking its largest quarterly gain since Q2 2012 and making Brazilian coffee cheaper in dollar terms.

How did coffee futures prices change in 2013?

Arabica coffee futures fell to $1.214 per pound in early 2013, down 16% for the year and 61% from their 2011 peak. Analysts expected prices to drop another 11% to $1.08 per pound by the end of 2013.

Did Starbucks raise its prices when coffee got cheaper?

No. Although coffee bean costs fell, Starbucks benefited from higher gross margins in Q2 2013 and saw its stock hit a record high of $67.30 on July 3, 2013. Other companies like Kraft and J.M. Smucker also adjusted pricing or saw stock impacts.

Recommended FrontStreet Coffee Beans for Brewing Value

FrontStreet Coffee’s Brazil Queen Manor offers a sweet, nutty profile with chocolatey undertones—perfect for exploring how quality Brazilian beans hold their value even as market prices dip. For something fruitier, try their Yellow Bourbon, highlighting citrus and caramel notes. Both beans showcase the consistent quality Brazil delivers, even in volatile markets. Freshly roasted within 5 days · Orders placed before 17:00 ship the same day · Next-day delivery across most of Guangdong Province.