Current Trends in Coffee Prices: An Overview
As of recent trading reports, coffee prices are experiencing a mixed performance. Arabica coffee has climbed to a significant position, reaching a seven-week high, while robusta coffee is facing some downward pressure. The primary driver behind the increase in arabica prices is the anticipated decline in Brazil's coffee production for the upcoming 2025/26 season.
The concern over Brazil’s coffee crop stems mainly from reports indicating that dry weather conditions in vital arabica regions are hampering coffee tree flowering. Rabobank, a global financial services provider, has projected a notable drop of 13.6% year-on-year in Brazil’s arabica production, estimating it at around 38.1 million bags.
The agriculture community is further unsettled by reports from Somar Meteorologia, which revealed that Brazil's largest arabica-producing region, Minas Gerais, received only 17.9 mm of rain recently, considerably lower than the historical average. The forecast indicates limited rainfall in the coming days, which could continue to strain coffee yields.
Interestingly, the current market supply dynamics are leaning towards the bearish side for certain coffee varieties. Recent statistics from the Intercontinental Exchange (ICE) show a rise in robusta coffee stocks to a two-week high of 4,272 lots and arabica coffee inventories also increased, hitting a peak of 815,926 bags—marking a 2.25-month high.
The ongoing geopolitical and trade tensions are contributing to a lull in commodity prices globally, including coffee. With the prospect of higher tariffs, there is growing anxiety about how these changes could dampen consumer demand for coffee in the U.S. market.
Supply issues are also influential factors in shaping coffee prices. Evidence from Cecafe indicates that Brazil’s green coffee exports dipped by 26% year-on-year in March, falling to 2.95 million bags. Furthermore, Brazil’s government crop forecasting agency, Conab, has lowered its estimates for both the 2024 and 2025 coffee crop years. For 2025/26, they anticipate a decline of 4.4% to approximately 51.81 million bags.
According to Cooxupe, Brazil's largest arabica coffee cooperative, the country is facing unfavorable weather conditions this year due to high temperatures and below-average rainfall, which could adversely affect yields.
On the robusta side, production is also under strain. Reports indicate that Vietnam's robusta coffee output for the 2023/24 season has plummeted by 20% to 1.472 million metric tons—the lowest production figure in four years. The Vietnam Coffee and Cocoa Association even adjusted its production forecast down to 26.5 million bags, indicating challenges in the robusta sector.
While Brazil continues to grapple with unfavorable weather patterns affecting arabica coffee, the impact of dry El Niño conditions continues to influence coffee agriculture across South and Central America. Consistent underperformance in rainfall since last April has harmed coffee plants during critical growth stages, reducing yield potential for the 2025/26 arabica crop significantly. Compounding these issues, Colombia is gradually recovering from its drought experiences, adding another layer of complexity to the global coffee market.
Despite concerns about reduced output, the broader coffee market is observing fluctuations in export activities. For instance, Brazil’s coffee exports saw a noteworthy 28.8% increase year-on-year in 2024, reaching a historic total of 50.5 million bags. In contrast, the International Coffee Organization (ICO) reported global coffee exports declined by 12.4% year-on-year in December.
Market forecasts by the USDA suggest mixed outcomes for coffee prices. According to their biannual report, a slight increase in global coffee production is anticipated for the 2024/25 marketing year, alongside a predicted decline in stock levels, which would hit a 25-year low.
Looking ahead, projections from Volcafe indicate a potential shortfall in arabica coffee production for the 2025/26 season. Their estimates show production could drop to 34.4 million bags, suggesting a deficit and compounding challenges faced by consumers and producers alike.
The dynamics of the coffee market reflect a complex interplay of supply constraints, weather challenges, and shifting market demand. Stakeholders should continue to monitor developments closely for indications that could influence future pricing trends.
Please share by clicking this button!
Visit our site and see all other available articles!