East African coffee producers are poised to reap even greater rewards as Brazil, the world's largest coffee supplier, faces a worsening drought that is set to further slash its output.

With the global supply tightening, demand for East African coffee, particularly from Kenya, Uganda, and Ethiopia, is expected to soar, driving up both prices and export revenues across the region.

Rainfall in Brazil has been consistently below average since April, damaging coffee trees during the critical flowering stage and reducing prospects for Brazil's 2025/26 arabica coffee crop.

In Kenya, coffee prices have risen steadily since the auction resumed last month following a brief recess. A 50-kilogramme bag of Kenyan coffee fetched $256 at the latest sale, up from $241 at previous auctions, according to market data.

Inventories monitored by ICE have also seen declines, with arabica coffee stocks dropping to a four- month low of 795,874 bags on October 3, while robusta coffee stocks hit a 4-3/4 month low of 4,191 lots last week, according to Barchart.

Ethiopia and Uganda, the largest coffee exporters in East Africa, are poised to capitalise on the situation. Both countries previously benefited from high coffee prices in 2021 after a frost in Brazil slashed production.

Ethiopia earned a record $1.43 billion from coffee exports in the 2023/24 fiscal year, exporting 298,500 tonnes--a 20 tonnes increase from the previous year's 240,000 tonnes, according to the Ethiopian Coffee and Tea Authority.

Uganda also recorded its highest foreign exchange earnings from coffee exports in 30 years during the same period, the Uganda Coffee Development Authority reported.

With Brazil's output expected to fall further, East African exporters are likely to see continued demand growth, boosting revenues across the region.