On Thursday, prices for coffee experienced a decline, with May arabica coffee (KCK25) finishing down by 0.55, a slight drop of 0.15%. Simultaneously, May ICE robusta coffee (RMK25) dropped by 135, marking a 2.51% decrease. The retreat in coffee prices can be attributed to a rising dollar, along with an increase in current coffee supplies. Reports from ICE indicated that arabica coffee inventories climbed to 795,588 bags, reaching a one-month high, whereas robusta coffee stocks also rose to 4,272 lots, the highest in a week.
This week has shown variability in coffee prices, with arabica coffee reaching a one-and-a-half week peak and robusta coffee hitting a two-and-a-half-week high earlier in the week. Concerns surrounding Brazil’s coffee yields due to below-average rainfall are contributing to the upward pressure on coffee prices. Data from Somar Meteorologia revealed that Minas Gerais, Brazil’s largest arabica coffee-growing region, received only 17.9 mm of rain last week, significantly lower than the historical average.
Worries about supply are providing further support for coffee prices. Reports from Cecafe indicated a 26% year-on-year decrease in Brazil’s green coffee exports for March, totaling 2.95 million bags. Additionally, Brazil’s government crop forecasting agency, Conab, recently announced a projected decline in the 2025/26 coffee crop by 4.4% year-on-year, estimating a three-year low of 51.81 million bags. They also adjusted their forecast for the 2024 crop downwards, cutting it by 1.1% to 54.2 million bags, compared to their earlier estimates.
A significant factor impacting coffee yields this year is the report from Cooxupe, Brazil’s largest arabica coffee cooperative, which noted that elevated temperatures and below-normal rainfall could negatively influence production. As the leading country in arabica coffee production, Brazil plays a crucial role in the global coffee market.
Despite some upward trends this week, arabica coffee recently fell to a three-month low amid fears of a global trade conflict, which has negatively impacted numerous commodities, including coffee. Concerns linger regarding potential decreased demand for coffee, as increased tariffs might lead to higher prices for consumers in the United States.
On a less optimistic note, Marex Solutions predicted that the global coffee surplus for the 2025/26 season could expand to 1.2 million bags, compared to a surplus of 200,000 bags in the previous season. Rising global supplies are casting a shadow over robusta coffee prices as well. According to their estimations, Vietnam’s robusta production for the 2025/26 season will increase by 7.9% year-on-year to reach 28.8 million bags, while Brazil’s robusta output is estimated to rise by 13.6% to 25 million bags.
The lingering effects of last year’s dry El Nino conditions may cause long-term damage to coffee crops in South and Central America. Brazil has been experiencing its driest weather since 1981, which has adversely affected coffee trees during their critical flowering phase and consequently reduced the expected yield for the 2025/26 arabica coffee crop. Meanwhile, Colombia, the second-largest producer of arabica coffee, is gradually recovering from the drought it faced last year, which was exacerbated by El Nino.
Robusta coffee is supported by a decrease in production due to adverse weather conditions. In Vietnam, coffee production for the 2023/24 crop year dropped by 20%, resulting in a total of 1.472 million metric tons, marking the smallest harvest in four years. Furthermore, exports from Vietnam in 2024 fell by 17.1%, totaling 1.35 million metric tons. The Vietnam Coffee and Cocoa Association revised its coffee production estimates downward to 26.5 million bags for 2024/25, compared to an earlier figure of 28 million bags.
Reports indicating larger global coffee exports could exert downward pressure on market prices. Conab reported a record increase of 28.8% year-on-year in Brazil’s coffee exports for 2024, amounting to 50.5 million bags. However, the International Coffee Organization highlighted a 12.4% year-on-year decline in global coffee exports for December, down to 10.73 million bags.
The biannual report from the USDA delivered a mixed outlook for coffee prices. The USDA’s Foreign Agriculture Service (FAS) anticipates a global coffee production increase of 4% in 2024/25, projecting a total of 174.855 million bags. This forecast includes a modest growth in arabica production to 97.845 million bags and a more substantial rise in robusta output to 77.01 million bags. Despite this positive trend, the USDA also predicts a pullback in ending stocks, expecting a decrease of 6.6% to a 25-year low of 20.867 million bags.
In a further adjustment, Volcafe recently downgraded its estimate for Brazilian arabica coffee production for the 2025/26 marketing year to 34.4 million bags, approximately 11 million bags lower than their prior assessment. They project a global deficit of 8.5 million bags for arabica coffee in 2025/26, widening from a 5.5 million bag deficit in the preceding year and marking the fifth consecutive year of shortfalls.
