Arabica Coffee Prices Hit Three-Week Low Amid Supply Concerns

May arabica coffee (KCK25) today fell -2.50 (-0.67%), while May ICE robusta coffee (RMK25) also dropped -36 (-0.67%).

Coffee prices are continuing their downward trend this week. Arabica coffee has reached a three-week low, and robusta is at a one-month low. A stronger U.S. dollar has exerted pressure on commodity prices across the board, including coffee. Additionally, arabica coffee prices are influenced by a rise in ICE-monitored arabica inventories, which increased to a one-week high of 803,066 bags on Tuesday, compared to last Tuesday’s nine-month low of 758,514 bags.

Inventory Trends in Robusta Coffee

In terms of robusta coffee, ICE-monitored inventories peaked at a five-month high on January 31 with 4,603 lots but have now decreased to a two-month low of 4,296 lots.

Weather Impact on Coffee Cultivation

Brazil’s coffee prices are supported by below-normal rainfall, with Somar Meteorologia reporting that the Minas Gerais region, Brazil’s primary arabica-growing area, received only 11.4 mm of rain last week—24% of the historical average. As the world’s leading arabica producer, Brazil’s conditions significantly influence global coffee markets.

Sales Data and Supply Dynamics

A noteworthy bullish factor is the increased percentage of Brazil’s coffee harvest that has already been sold, which suggests a dwindling supply. Safras & Mercado reported that as of February 11, producers sold 88% of Brazil’s 2024/25 coffee harvest, significantly higher than last year’s 79% for the same period and above the five-year average of 82%. However, sales of the 2025/26 crop have been sluggish at just 13%, compared to the four-year average of 22%, indicating a reluctance from producers to sell.

Fears of supply shortages continue to impact coffee prices. Cecafe reported on February 12 that Brazil’s green coffee exports in January decreased -1.6% year-on-year to 3.98 million bags. Furthermore, Brazil’s crop forecasting agency, Conab, projected a -4.4% year-on-year decline in its 2025/26 coffee crop to a three-year low of 51.81 million bags. Additionally, Conab revised its 2024 Brazil coffee crop estimate down by -1.1% to 54.2 million bags from an earlier estimate of 54.8 million bags.

Long-Term Weather Concerns

The El Niño weather pattern’s aftereffects from last year could lead to longer-term damage to coffee crops in South and Central America. Rainfall in Brazil has consistently been less than average since April, negatively affecting coffee trees during the critical flowering stage and diminishing prospects for Brazil’s forthcoming arabica crop. Brazil is experiencing its driest weather since 1981, according to Cemaden, the national disaster monitoring center. Colombia, the world’s second-largest arabica producer, is gradually mending from drought conditions triggered by last year’s El Niño.

Robusta Production and Market Outlook

Robusta prices also face downward pressures due to reduced production. According to the USDA Foreign Agricultural Service (FAS), Vietnam’s coffee production for the 2023/24 crop year has dropped by -20% to 1.472 million metric tons (MMT), the smallest yield in four years. The USDA now projects Vietnam’s robusta production in the upcoming 2024/25 marketing year to decline slightly to 27.9 million bags from 28 million bags in 2023/24. Moreover, the General Statistics Office of Vietnam reported a -17.1% year-on-year decrease in 2024 coffee exports to 1.35 MMT. Conversely, the Vietnam Coffee and Cocoa Association has increased its 2024/25 production estimate to 28 million bags from an earlier figure of 27 million bags.

Global Coffee Export Trends

Reports of increased global coffee exports are bearish for prices. Conab noted that Brazil’s coffee exports for 2024 rose +28.8% year-on-year to a record 50.5 million bags. Additionally, according to the General Statistics Office, Vietnam’s January coffee exports increased +6.3% month-over-month to 134,000 MT. However, the International Coffee Organization (ICO) indicated that global coffee exports in December fell -12.4% year-on-year to 10.73 million bags, and total exports between October and December declined -0.8% year-on-year to 32.25 million bags.

USDA Reports on Coffee Outlook

The USDA’s biannual report released on December 18 presented a mixed outlook for coffee prices. The USDA FAS predicted a +4.0% year-on-year increase in global coffee production for 2024/25 to 174.855 million bags, including a +1.5% rise in arabica production to 97.845 million bags and a substantial +7.5% boost in robusta production to 77.01 million bags. However, they also forecasted a -6.6% drop in ending stocks, predicting they would decrease to a 25-year low of 20.867 million bags from 22.347 million in 2023/24.

For the 2025/26 marketing year, Volcafe lowered its Brazil arabica coffee production estimate to 34.4 million bags, down roughly 11 million bags from a September estimate. They also project a global arabica coffee deficit of -8.5 million bags for 2025/26, more significant than the -5.5 million bag deficit expected for 2024/25, marking the fifth consecutive year of deficits.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is 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.