On Thursday, July arabica coffee closed up 3.93% at +13.60, while July ICE robusta coffee rose 2.71% at +121, reaching one-week highs. The price rally was largely driven by a 7-1/2 month high in the Brazilian real against the dollar, which prompted fund short covering in coffee futures and discouraged export selling from Brazil.
Concerns over poor weather in Brazil, specifically a lack of rain in the key arabica-growing region of Minas Gerais, have raised fears of reduced crop yields. As of May 28, Brazil’s coffee harvest was reported at 20% complete, slightly below the five-year average of 21%. Meanwhile, ICE coffee inventories have increased, with robusta inventory rising to 5,438 lots, the highest in 8-1/2 months, and arabica inventory at a four-month high of 892,468 bags.
Brazil’s April green coffee exports plummeted by 28% year-over-year to 3.05 million bags, and year-to-date exports are down 15.5% year-over-year to 13.186 million bags. In contrast, the USDA projects Brazil’s coffee production for the 2025/26 marketing year to increase slightly to 65 million bags, while Vietnam’s robusta production is expected to decrease by 20% to 1.472 million metric tons for the 2023/24 crop year.
