Coffee Prices Show Divergent Trends Amid Global Supply Changes
Arabica coffee prices rise as robusta faces pressure due to increasing export numbers.
On Friday, March arabica coffee (KCH25) closed up by +5.35 (+1.68%), while March ICE robusta coffee (RMH25) dropped -13 (-0.26%). Coffee prices ended the week with mixed results.
Dry weather in Brazil has been a positive factor for arabica coffee. According to Somar Meteorologia, the Minas Gerais region, Brazil’s largest arabica-growing area, received 62.5 mm of rain last week, which is only 86% of the historical average. Conversely, robusta coffee faced downward pressure after Vietnam’s General Department of Customs reported a remarkable +102.6% year-over-year increase in December coffee exports, amounting to 127,655 metric tons.
The rise in inventory levels also weighs on coffee prices. ICE-monitored arabica coffee inventories reached a 2-1/2 year high of 993,562 bags as of Monday. Additionally, robusta inventories hit a 3-month high of 4,415 lots on Wednesday, also monitored by ICE.
However, conditions still support robusta coffee due to a decrease in global production. The General Statistics Office of Vietnam flagged a -17.1% year-over-year decrease in coffee exports for 2024, projecting production at 1.35 million metric tons. As the leading producer of robusta coffee, Vietnam’s output is closely watched by global markets.
Last month, coffee prices surged sharply as the market reacted to predictions of a smaller coffee crop in Brazil. March arabica futures reached contract highs, while the nearest December futures contract (Z24) set a record. On December 17, Volcafe revised its 2025/26 production forecast for Brazilian arabica coffee down to 34.4 million bags, cutting approximately 11 million bags from earlier estimates following a crop tour that revealed the severity of ongoing drought conditions. This projection indicates a global arabica coffee deficit of 8.5 million bags in 2025/26, a significant increase from the deficit of 5.5 million bags expected for 2024/25, marking the fifth consecutive year of deficits.
Additional support for coffee prices came when consultancy group Safras & Mercado reported on December 20 that the Brazilian coffee crop for 2025/26 is expected to be 62.45 million bags, a -5% decline from the previous year. Notably, arabica output is anticipated to fall by -15% year-over-year to 38.35 million bags as drought conditions persist, while robusta production is estimated at 24.1 million bags.
The longer-term implications of last year’s El Nino weather pattern may further weaken coffee crops across South and Central America. Rainfall in Brazil has lingered below average since April, harming coffee trees during crucial growth stages. Brazil is experiencing its driest weather since 1981, as noted by natural disaster monitoring center Cemaden. Meanwhile, Colombia, the second-largest arabica producer, is gradually recovering from last year’s El Nino-induced drought.
Robusta coffee prices are buoyed by reduced production in Vietnam. The drought has led to a -20% drop in Vietnam’s coffee production for the 2023/24 crop year, totaling 1.472 million metric tons—the smallest crop in four years. The USDA Foreign Agriculture Service projected a slight dip in Vietnam’s robusta production for the 2024/25 marketing year, from 28 million bags to 27.9 million bags. However, the Vietnam Coffee and Cocoa Association recently raised its production forecast for the same period to 28 million bags, slightly above previous estimates.
On the flip side, growing global coffee exports may contribute to downward pressure on prices. The International Coffee Organization (ICO) reported a +15.1% year-over-year increase in global coffee exports for October, totaling 11.13 million bags, as the 2023/24 exports increased +11.7% year-over-year to 137.27 million bags. Brazilian beans have followed suit; Cecafe’s December 23 report indicated that Brazil’s green coffee exports rose +2.7% year-over-year to 4.29 million bags, with 2023/24 exports increasing by 33% year-over-year to a record 47.3 million bags.
In a further bearish turn, the ICO announced that global coffee production for the 2023/24 season increased by +5.8% year-over-year to a record 178 million bags, thanks to a strong off-biennial crop year. Meanwhile, world coffee consumption rose +2.2% year-over-year to a record 177 million bags, leading to a slight surplus of 1 million bags.
The USDA’s biannual report on December 18 presented a mixed outlook for coffee prices. The FAS projected that global coffee production in 2024/25 will rise +4.0% year-over-year to 174.855 million bags, which includes a +1.5% increase in arabica production to 97.845 million bags and a +7.5% boost in robusta production to 77.01 million bags. The report also indicated a projected drop in ending stocks for 2024/25, estimated to be at a 24-year low of 20.867 million bags—down -6.6% from 22.347 million bags in the previous season. Furthermore, a separate projection estimated Brazil’s 2024/25 coffee production at 66.4 million metric tons, which is lower than a previous forecast of 69.9 million metric tons. It is also expected that Brazil’s coffee inventory could drop by -26% year-over-year by the end of the 2024/25 season, totaling 1.2 million bags.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, 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.
