Coffee Prices Experience Mixed Results Amid Varying Crop Predictions
May arabica coffee (KCK25) closed on Tuesday up +10.85 (+2.96%), while May ICE robusta coffee (RMK25) fell -22 (-0.42%). Prices for coffee settled unevenly, as robusta reached a one-week low.
Arabica Coffee Rises Due to Brazilian Real Strength
Arabica coffee prices increased thanks to a strengthening Brazilian real (^USDBRL), which climbed to a two-week high against the U.S. dollar. This situation deterred export sales from Brazilian coffee producers, creating upward price pressure.
Further support for arabica came from Rabobank’s forecast predicting a 13.6% year-over-year decline in Brazil’s 2025/26 arabica coffee crop, dropping to 38.1 million bags. The forecast attributes this drop to dry weather, which has severely affected the flowering of coffee trees. On the other hand, robusta coffee faced downward pressure as Rabobank projected a 7.3% year-over-year increase in Brazil’s 2025/26 robusta coffee crop to a record 24.7 million bags.
Rising Inventories Pose Challenges to Coffee Prices
Increased coffee supplies generally exert downward pressure on prices. Recently, ICE-monitored robusta coffee inventories rose to a weekly high of 4,272 lots, while arabica inventories reached a six-week high of 806,181 bags on Tuesday.
The global trade situation remains unstable, which is weighing down various commodity prices including coffee. Additionally, there are concerns that rising tariffs may lead to higher coffee prices for U.S. consumers, potentially dampening demand.
Weather Impacts and Supply Concerns
Despite recent price rallies, the coffee market showed signs of instability. Last week, arabica coffee marked a two-week high while robusta reached a three-week high. Below-average rainfall in Brazil could negatively affect coffee yields, according to Somar Meteorologia, which reported that Brazil’s largest arabica-growing region, Minas Gerais, received only 17.9 mm of rain during the week ending April 12—just 89% of the historical average.
Supply concerns also contribute to price support. Data from Cecafe revealed that Brazil’s green coffee exports dropped 26% year-over-year in March to 2.95 million bags. Similarly, Conab, Brazil’s government crop forecasting agency, has projected a 4.4% year-over-year decline in the country’s 2025/26 coffee crop, estimating it at a three-year low of 51.81 million bags. Conab also adjusted its 2024 Brazil coffee crop estimate down by 1.1% to 54.2 million bags from a previous estimate of 54.8 million.
Texas Temperatures Affect Coffee Yields
Cooxupe, Brazil’s largest arabica coffee cooperative, reported that high temperatures and lack of rainfall last month would adversely impact coffee yields this year. Brazil remains the world’s largest producer of arabica coffee.
On the flip side, Marex Solutions has warned that the global coffee surplus for the 2025/26 season could widen to 1.2 million bags, an increase from the previously projected surplus of 200,000 bags in the 2024/25 season.
Global Coffee Production Forecasts
Reports indicate that increased global supplies are negative for robusta coffee as well. Marex Solutions forecasts that Vietnam’s robusta production for 2025/26 is likely to rise to 28.8 million bags, marking a 7.9% year-over-year increase, while Brazil’s robusta production is expected to reach 25 million bags, a 13.6% increase from previous years.
The impacts of last year’s dry El Niño weather may lead to long-term damage for coffee crops in South and Central America. Brazil, in particular, has experienced its driest conditions since 1981, which has harmed coffee trees during their flowering phase, jeopardizing the forecast for the 2025/26 arabica coffee crop. Colombia, as the world’s second-largest arabica producer, is slowly recovering from drought conditions triggered by El Niño last year.
Robusta coffee prices find some support due to reduced production figures. Vietnam’s coffee output dropped by 20% in the 2023/24 crop year, bringing yields down to 1.472 million metric tons—the smallest in four years. The Vietnam General Statistics Office reported a significant drop in 2024 coffee exports, which fell 17.1% year-over-year to 1.35 million metric tons. Additionally, the Vietnam Coffee and Cocoa Association reduced its 2024/25 robusta production estimate to 26.5 million bags from an earlier estimate of 28 million bags. The Vietnam Customs Department also reported a 15.3% year-over-year decline in coffee exports between January and March, totaling 495,780 metric tons.
Competition from Increased Global Exports
Concerns about larger global coffee exports could negatively affect prices. Conab reported that Brazil’s 2024 coffee exports surged 28.8% year-over-year to a record 50.5 million bags. However, the International Coffee Organization noted that global coffee exports fell 12.4% year-over-year in December to 10.73 million bags and showed a slight decline of 0.8% for the period from October to December, totaling 32.25 million bags.
The January 2024 biannual report from the USDA’s Foreign Agriculture Service (FAS) presented a varied outlook. The FAS forecasts a 4% year-over-year increase in global coffee production for 2024/25, reaching 174.855 million bags. While arabica production is expected to rise 1.5% to 97.845 million bags, robusta is estimated to see a larger rise of 7.5% to 77.01 million bags. Ending stocks for 2024/25 are projected to decline by 6.6% to a 25-year low of 20.867 million bags from 22.347 million bags in 2023/24. Additionally, the FAS revised Brazil’s 2024/25 coffee production downward to 66.4 million bags, down from a prior forecast of 69.9 million bags. Inventories in Brazil at the end of the 2024/25 season are expected to be down by 26% year-over-year, totaling 1.2 million bags.
Volcafe, on December 17, also lowered its 2025/26 Brazil arabica coffee production estimate to 34.4 million bags, down approximately 11 million from a previous estimate, following a crop tour that highlighted the gravity of Brazil’s prolonged drought. Volcafe now anticipates a 2025/26 global arabica coffee deficit of 8.5 million bags, widening from 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 purely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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