**Coffee Market Update: Mixed Prices Amid Supply Concerns**
On Wednesday, March arabica coffee (KCH26) closed down 1.45 points (-0.41%), while March robusta coffee (RMH26) gained 4 points (+0.10%). The coffee market experienced volatility as arabica prices fell following a rise in the dollar index to a one-week high, despite robusta reaching a two-and-a-half-week high due to supply concerns.
Key factors impacting prices include widespread flooding in Indonesia, which affects about one-third of the country’s arabica coffee farms in northern Sumatra, potentially reducing exports by 15% in the 2025-26 season. Additionally, coffee inventories monitored by ICE have fluctuated, with arabica inventories briefly declining to a 1.75-year low of 398,645 bags on November 20, before rising to a two-month high of 456,477 bags last Wednesday. The USDA projects a slight increase in global coffee production to 178.848 million bags for 2025/26, but a decrease in arabica output to 95.515 million bags, while robusta production could increase by 10.9% to 83.333 million bags.
