Coffee Prices Rise Amid Mixed Production Reports and Inventory Changes

Subheading: March Arabica and Robusta Coffee Prices Show Gains Today

March arabica coffee (KCH25) has increased by +1.40 (+0.44%), while March ICE robusta coffee (RMH25) has gained +39 (+0.79%).

Today’s coffee prices are showing moderate increases. The Brazilian real (^USDBRL) has risen by +0.62% and is near a 2-1/2 week high. This has encouraged some short covering in coffee futures.

However, rising inventories are limiting the gains in coffee prices. ICE-monitored arabica coffee stocks reached a 2-1/2 year high of 993,562 bags on Monday. Similarly, robusta coffee inventories climbed to a 3-month high of 4,415 lots on Wednesday.

Arabica prices are benefiting from below-average rainfall in Brazil. Somar Meteorologia reported that Brazil’s top arabica-growing region, Minas Gerais, received only 62.5 mm of rain last week—just 86% of its historical average.

Robusta coffee prices are supported by indications of smaller global supplies. Vietnam’s General Statistics Office announced on Sunday that coffee exports for 2024 had dropped by -17.2% year-over-year to 1.343 million metric tons, impacting global availability as Vietnam is the largest producer of robusta coffee.

Last month saw a significant increase in coffee prices driven by forecasts of a reduced Brazilian coffee crop. March arabica experienced a contract high, while the December coffee nearest-futures contract (Z24) hit a record high. This surge followed Volcafe’s December 17 adjustment of its 2025/26 Brazil arabica coffee production estimate to 34.4 million bags, down roughly 11 million from its September figure, after a drought assessment during a crop tour. Volcafe forecasts an arabica coffee deficit of 8.5 million bags for 2025/26, larger than the 5.5 million bag deficit projected for 2024/25, marking the fifth straight year of shortages.

Support also came from consultancy Safras & Mercado, which on December 20 estimated the 2025/26 Brazilian coffee crop at 62.45 million bags, a 5% decrease from the previous year. It predicts arabica output will drop by -15% year-over-year to 38.35 million bags due to drought, while robusta production will reach 24.1 million bags.

The USDA’s biannual report released on December 18 offered mixed signals for coffee prices. The USDA’s Foreign Agriculture Service (FAS) projected that world coffee production for 2024/25 will grow by +4.0% year-over-year to 174.855 million bags, including a +1.5% rise in arabica to 97.845 million bags and a +7.5% hike in robusta to 77.01 million bags. Ending stocks for 2024/25 are expected to decline by -6.6% to their lowest level in 24 years at 20.867 million bags, down from 22.347 million bags for 2023/24. The FAS had previously projected Brazil’s 2024/25 coffee production at 66.4 million bags, a drop from 69.9 million previously forecasted.

Dry weather due to El Nino last year may result in long-lasting damage to coffee crops in South and Central America. In Brazil, rainfall has been consistently below average since last April, negatively affecting coffee trees during the critical flowering period and diminishing prospects for the 2025/26 arabica coffee crop. Brazil is experiencing its driest weather since 1981, as reported by Cemaden, the disaster monitoring center. Meanwhile, Colombia, the second-largest arabica producer, is slowly recovering from last year’s drought exacerbated by El Nino.

Robusta coffee prices are supported by reduced production in Vietnam, where drought has led to a -20% drop in the country’s coffee output for the 2023/24 crop year, totaling 1.472 million metric tons—the lowest yield in four years. The USDA FAS projected a slight decrease in Vietnam’s robusta production for the upcoming 2024/25 marketing year, estimating 27.9 million bags, down from 28 million bags. Conversely, the Vietnam Coffee and Cocoa Association recently raised its 2024/25 coffee production estimate to 28 million bags, up from 27 million bags.

Recent news of increased global coffee exports is putting downward pressure on prices. The International Coffee Organization (ICO) reported on December 5 that global coffee exports in October rose by +15.1% year-over-year to 11.13 million bags. For the 2023/24 season (October-September), global coffee exports increased by +11.7% year-over-year to 137.27 million bags. Additionally, Cecafe indicated that Brazil’s green coffee exports increased by +2.7% year-over-year to 4.29 million bags, with Brazilian coffee exports for the 2023/24 season climbing +33% year-over-year to a record 47.3 million bags.

Finally, the ICO recently reported that global coffee production saw a record increase of +5.8% year-over-year for 2023/24, reaching 178 million bags due to an exceptional off-biennial crop year. Consumption also rose, up +2.2% year-over-year to a record 177 million bags, resulting in a small 1 million bag surplus.

On the date of publication, Rich Asplund did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data are provided for informational purposes. For more details, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.