Recent Trends in Coffee Prices: Insights for Coffee Lovers and Traders
In recent weeks, coffee prices have shown a notable increase, primarily driven by a drop in the dollar index and emerging supply concerns. Specifically, both arabica and robusta coffee prices experienced significant gains, with arabica up by approximately 4.33% and robusta by 3.28%.
One of the pivotal factors influencing these price changes is the report from Cecafe, Brazil’s coffee export agency, which disclosed a significant 26% year-over-year decrease in green coffee exports for March. This decline in supply has heightened concerns among traders about future coffee availability. Furthermore, inventory levels for robusta coffee monitored by ICE have dropped to a six-week low, compounding fears of tighter supplies.
Adding to the complexity of the market, arabica coffee prices previously fell to a 2-3/4 month low due to fears surrounding global trade tensions, which cast a shadow over several commodities, including coffee. There are concerns that escalating tariffs could dampen coffee demand as prices rise for consumers in the U.S.
In Brazil, the primary producer of arabica coffee, recent weather patterns have shifted, leading to expectations of improved yields. Meteorological data indicates that the significant arabica-growing region of Minas Gerais received nearly double the usual rainfall for early April, which could alleviate dryness concerns. However, forecasts from Brazil’s government crop agency, Conab, have also raised alarms. They predict a 4.4% reduction in the coffee crop for 2025/26, projecting production at a three-year low of 51.81 million bags. Additionally, revisions to the 2024 crop estimate suggest only a slight decrease, but this is still concerning for producers.
On the inventory side, arabica coffee stocks have recently shown growth, complicating the market conditions. The latest data from ICE indicated a rise in arabica inventories to a three-week high of 785,559 bags, which might suppress prices if the trend continues.
The situation regarding yields also remains critical. Brazil’s leading arabica coffee cooperative, Cooxupe, has indicated that high temperatures and below-average rainfall in prior months might adversely impact this year’s coffee yields. This predicament is particularly concerning for Brazil, as it maintains its status as the world’s dominant producer of arabica coffee.
On a broader scale, projections suggest that the global coffee market may see an increasing surplus, with estimates from Marex Solutions anticipating a surge to 1.2 million bags by the 2025/26 season. This is a sharp increase compared to the more modest surplus of 200,000 bags expected in the following season. Such trends could exert downward pressure on robusta coffee prices as well, especially given that significant increases in production have been forecasted for both Vietnam and Brazil.
Specifically, Vietnam is anticipated to produce 28.8 million bags of robusta, marking a 7.9% year-over-year increase, while Brazilian production is expected to rise to 25 million bags, reflecting a 13.6% increase. However, it’s worth noting that adverse weather conditions, particularly the ongoing impact of last year’s El Niño, pose long-term risks to coffee crops in both South and Central America.
In Vietnam, the situation remains precarious, with drought conditions having led to diminished crop yields, predicted at around 1.472 million metric tons for the 2023/24 crop year, representing a 20% decline. The General Statistics Office of Vietnam attributed a significant drop in coffee exports to this reduced output, further complicating market dynamics.
As the global coffee landscape evolves, there are mixed signals about the future. Reports indicate that while Brazil’s 2024 coffee exports surged to a record high, global coffee exports nonetheless fell by 12.4% in December compared to the previous year. Additionally, forecasts from the USDA suggest a potential increase in global coffee production for 2024/25, with projections indicating a rise in both arabica and robusta output.
Looking ahead, the challenges posed by persistent drought in Brazil and the recovery in Colombia could significantly impact the global coffee market. Traders, producers, and coffee enthusiasts alike will be closely monitoring developments that could shape coffee supply and demand dynamics in the coming months.
