Coffee, Cocoa and Sugar Markets Poised for New Phase After Volatile Period, Citi Forecasts

Citi analysts say coffee, cocoa, and sugar markets may be entering a new phase after months of sharp volatility according to a recent outlook published by Bloomberg Línea.

The bank said prices for the three soft commodities have been driven higher this year by a combination of structural shortages and short-term shocks, including adverse weather in major producing countries and logistical disruptions.

Citi noted that while fundamentals remain tight, especially for cocoa, recent price behavior suggests markets may be transitioning away from extreme swings toward more differentiated trends across each commodity, as Bloomberg reports.

Coffee prices surged earlier in the year amid production concerns in Brazil and Vietnam, while cocoa climbed to record highs as disease and aging trees curtailed output in West Africa. Sugar prices were supported by lower-than-expected harvests and policy uncertainty in key exporters. Citi said that going forward, supply responses, improved weather conditions, and demand adjustments could begin to temper price pressures, though risks remain elevated.

The outlook comes against the backdrop of recent changes in U.S. trade policy affecting agricultural imports. Earlier this year, President Donald Trump imposed broad tariffs on food imports, including coffee and cocoa, framing the move as part of a push for national self-sufficiency. Coffee prices in the U.S. rose sharply following the measures, with year-over-year increases exceeding 40% by September, according to government data.

In mid-November, however, the White House reversed course, lifting tariffs on products that cannot be produced at scale domestically, including coffee, cocoa, bananas, and orange juice. Trump said the rollback was intended to ease price pressures, adding that coffee prices would move "to the low side in a very short period of time." The exemptions took effect retroactively on November 13.

Citi said that while tariff relief may help stabilize consumer prices in the United States, global price dynamics will continue to be shaped primarily by production trends, climate conditions, and investment flows. The bank cautioned that soft commodity markets remain vulnerable to renewed volatility if supply disruptions re-emerge or demand rebounds faster than expected.