Coffee Market Update: Arabica Rises While Robusta Declines

On Thursday, July arabica coffee (KCN25) closed up +10.20 (+2.80%), while July ICE robusta coffee (RMN25) ended the day down -39 (-2.16%). Coffee prices showed mixed results, with robusta hitting a five-week low. Arabica coffee rebounded from a three-week low due to concerns about declining exports from Brazil.

Cecafe reported a significant drop in Brazil’s April green coffee exports, which fell by -28% year-over-year to 3.05 million bags. Additionally, coffee exports from January to April decreased by -15.5% year-over-year to 13.186 million bags.

Weather Concerns Support Arabica Prices

Arabica prices benefited from last week’s lackluster rainfall in Brazil. Somar Meteorologia noted that Brazil’s top arabica-growing region, Minas Gerais, received only 0.8 mm of rain in the week ending May 10, which is just 16% of the historical average.

Robusta Prices Weighed Down by Inventory Increases

Conversely, robusta prices are under pressure from a rise in inventories. ICE-monitored robusta coffee stocks reached a seven-and-a-half-month high of 4,755 lots on Thursday. Similarly, ICE-monitored arabica coffee inventories increased to a two-and-three-quarter-month high of 844,473 bags last Wednesday.

Demand Concerns Impact Overall Coffee Prices

Current demand concerns are also bearish for coffee prices. Major global commodity importers, including Starbucks, Hershey, and Mondelez International, expressed that the U.S. baseline 10% tariff on imports would elevate prices, further squeezing sales volumes.

In terms of global supply, the USDA last Friday projected that coffee production in Honduras—a significant producer—would increase by +5.1% year-over-year to 5.8 million bags for the 2025/26 season. Additionally, consulting firm Safras & Mercado raised its Brazil 2025/26 coffee production estimate to 65.51 million bags, up from a previous estimate of 62.45 million bags. The Brazilian crop forecasting agency, Conab, also increased its estimate to 55.7 million bags from 51.81 million bags.

Robusta Coffee Production Challenges

Robusta coffee received some support last Tuesday when Vietnam’s National Statistics Office reported a -9.8% year-over-year decline in Vietnam’s 2025 January-April coffee exports, totaling 663,000 metric tons. Factors such as drought have led to a -20% reduction in Vietnam’s coffee production for the 2023/24 crop year, marking the smallest crop in four years.

On top of that, the General Statistics Office of Vietnam stated that coffee exports fell -17.1% year-over-year to 1.35 million metric tons. The Vietnam Coffee and Cocoa Association revised its 2024/25 production estimate down to 26.5 million bags from December’s 28 million bags. In contrast, Rabobank forecasts Brazil’s 2025/26 robusta coffee crop to rise by +7.3% year-over-year, reaching a record 24.7 million bags.

USDA Production Forecasts and Market Dynamics

The USDA’s biannual report, published on December 18, presented mixed signals for coffee prices. The USDA’s Foreign Agriculture Service (FAS) anticipates a +4.0% increase in world coffee production for 2024/25 to 174.855 million bags. This includes a +1.5% rise in arabica production to 97.845 million bags and a +7.5% increase in robusta production to 77.01 million bags. Furthermore, FAS forecasts a -6.6% drop in 2024/25 ending stocks to a 25-year low of 20.867 million bags, down from 22.347 million bags in 2023/24.

In a previous forecast, the USDA projected Brazil’s 2024/25 coffee production at 66.4 million metric tons, lower than its earlier estimate of 69.9 million metric tons. It expects Brazil’s coffee inventories to decrease to 1.2 million bags by the end of the 2024/25 season in June, representing a -26% year-over-year decline.

Looking toward the 2025/26 marketing year, Volcafe on December 17 cut its Brazil arabica coffee production estimate to 34.4 million bags, a reduction of about 11 million bags from its September estimate, following reports of severe drought conditions in Brazil. Volcafe also forecasts a global arabica coffee deficit of -8.5 million bags for 2025/26, a worsening from the -5.5 million bag deficit 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
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.