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### Coffee Price Trends: Insights into the Market

As of the latest trading session, coffee prices displayed mixed results. Arabica coffee, designated for July delivery, recorded a modest increase, while robusta coffee experienced a decline. The fluctuation in prices can be attributed to various market factors, including changes in global coffee supply and demand dynamics.

Recent reports indicate that the weakening dollar has had a supportive effect on coffee prices. However, the upswing is often curtailed by forecasts predicting larger global coffee supplies. Notably, the USDA has projected a 5.1% year-over-year increase in coffee production for Honduras, Central America's leading coffee grower, expected to reach 5.8 million bags in 2025/26. Additionally, the consulting firm Safras & Mercado has revised Brazil's coffee production estimate for the same period upward, now anticipating 65.51 million bags compared to an earlier forecast of 62.45 million bags.

### Improved Inventory Levels Impact Prices

The inventory situation surrounding coffee has also shifted, presenting a bearish angle for prices. For instance, ICE (Intercontinental Exchange) reported robusta coffee inventories rising to a three-month high, now totaling 4,418 lots. Meanwhile, arabica coffee stocks have reached a two-and-three-quarter-month high of 844,473 bags.

Demand concerns play a significant role in shaping coffee prices. Major companies such as Starbucks, Hershey, and Mondelez International have expressed worries that rising tariffs on coffee imports in the U.S. would elevate prices and further squeeze sales volumes.

### Fluctuations in Global Production

On one hand, arabica coffee prices surged to a two-and-a-half-month high due to concerns over a potential decrease in Brazil's crop yield. Rabobank has predicted a 13.6% reduction in Brazil's 2025/26 arabica coffee output, estimating it will fall to 38.1 million bags. This projection stems from adverse weather conditions affecting flowering in key regions.

Conversely, Brazilian coffee exports witnessed a sharp decrease in March, dropping by 26% year-over-year to 2.95 million bags. Drought conditions in Brazil and Vietnam have also affected coffee production. In Vietnam, strong drought measures have led to a 20% drop in coffee production for the 2023/24 cycle, marking the smallest yield in four years.

### Market Support and Challenges

While market support for robusta coffee strengthened—fueled by reports indicating a reduction in Vietnam's coffee production—challenges remain. The National Statistics Office of Vietnam revealed that the country's coffee exports from January to April 2025 fell by nearly 10% year-over-year, totaling 663,000 metric tons.

In a more optimistic note, Rabobank forecasts a 7.3% rise in Brazil's 2025/26 robusta coffee crop, projecting a record 24.7 million bags. However, news of increased global coffee exports has raised concerns about price stability. Recent statistics indicate a record 50.5 million bags in Brazilian coffee exports for the 2024 season, even as global coffee exports declined slightly year-over-year.

### Mixed Outlook from USDA Reports

The USDA released a mixed report, projecting a 4.0% year-over-year increase in global coffee production for 2024/25, with arabica and robusta coffee areas both expected to see growth. Still, with decreasing ending stocks projected at a 25-year low, market sentiments are somewhat subdued.

Most notably, Volcafe has adjusted its 2025/26 Brazil arabica coffee production estimate downward by about 11 million bags, citing the severity of drought conditions. This has contributed to a predicted global deficit of arabica coffee for the fifth consecutive year, indicating systemic challenges in the market.

The coffee market remains complex and multifaceted, with a blend of increasing supply, shifting demand, and fluctuating price points shaping the current landscape. Stakeholders in the industry will need to keep a close watch on these trends as they evolve.

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