Arabica Coffee Prices Face Pressure Amid Brazil’s Rainfall; Robusta Sees Gains

July arabica coffee (KCN25) today is down -1.40 (-0.36%), while July ICE robusta coffee (RMN25) has risen by +142 (+2.77%).

Mixed Coffee Market Conditions

Today’s coffee prices present a mixed outlook. Arabica coffee is experiencing downward pressure due to above-normal rainfall across Brazil, which has increased soil moisture levels and negatively impacted prices. Somar Meteorologia reported that Brazil’s main arabica coffee region, Minas Gerais, received 38.7 mm of rain in the week ending April 19, an amount 490% above the historical average.

Robusta Coffee Supported by Supply Constraints

In contrast, robusta coffee prices are being uplifted by declining supplies from Vietnam, the world’s largest robusta producer. The Vietnam Customs Department announced that coffee exports during the first quarter of 2023 fell -15.3% year-on-year, totaling 495,780 metric tons.

Demand Concerns Weighing on Prices

Demand issues are also creating bearish pressure on coffee prices. Major global commodity importers, including Starbucks, Hershey, and Mondelez International, warned that a baseline 10% tariff on imports into the U.S. might increase prices and suppress sales volumes.

Production Forecasts Stir Market Activity

On Tuesday, arabica coffee reached a 2.5-month high, while robusta hit a one-month high amid fears of a smaller Brazilian crop. Last Tuesday, Rabobank predicted that Brazil’s arabica coffee harvest for 2025/26 would drop -13.6% to 38.1 million bags due to dry weather in key growing regions that hampered the flowering of coffee plants. Conversely, the same report forecasted Brazil’s robusta coffee crop for 2025/26 would increase by +7.3% to a record 24.7 million bags.

Falling Exports and Inventory Dynamics

Concerns about supply are providing support for coffee prices. Cecafe reported a -26% year-on-year decline in Brazil’s green coffee exports for March, totaling 2.95 million bags. In January, Brazil’s government crop forecasting agency, Conab, projected a -4.4% drop for the 2025/26 coffee crop to 51.81 million bags, marking a three-year low. In a subsequent adjustment, Conab reduced its 2024 Brazil coffee crop estimate by -1.1% to 54.2 million bags from an earlier figure of 54.8 million bags.

Current Inventory Trends

The current coffee inventory situation varies widely. As of Wednesday, ICE-monitored robusta coffee inventories hit a four-month low at 4,225 lots. In contrast, ICE-monitored arabica coffee inventories increased to a 2.5-month high of 826,304 bags.

Vietnam Production Challenges

Robusta coffee prices also benefit from decreased production in Vietnam. Due to drought conditions, Vietnam’s coffee output for the 2023/24 crop year is down -20% to 1.472 million metric tons, the lowest yield in four years. Additionally, Vietnam’s General Statistics Office indicated that 2024 coffee exports fell -17.1% year-on-year to 1.35 million metric tons. The Vietnam Coffee and Cocoa Association further revised its 2024/25 production estimate down to 26.5 million bags from a prior figure of 28 million bags.

Global Export Trends and Price Impact

News about larger global coffee exports is contributing to bearish sentiment. Conab reported a +28.8% increase in Brazil’s 2024 coffee exports, reaching a record 50.5 million bags. However, the International Coffee Organization (ICO) indicated that December global coffee exports declined -12.4% year-on-year to 10.73 million bags, while October to December exports experienced a slight decrease of -0.8% to 32.25 million bags.

USDA Reports Present a Mixed Picture

The USDA’s biannual report released on December 18 provided a mixed outlook. The USDA’s Foreign Agriculture Service (FAS) projected a +4.0% increase in global coffee production for 2024/25, reaching 174.855 million bags, with arabica production expected to rise by +1.5% to 97.845 million bags, and robusta production by +7.5% to 77.01 million bags. However, the FAS forecasts that ending stocks for 2024/25 will decline by -6.6% to a 25-year low of 20.867 million bags.

Ongoing Crop Forecast Adjustments

For the 2025/26 marketing year, Volcafe has cut its Brazil arabica coffee production estimate to 34.4 million bags, down roughly 11 million bags from a September estimate due to severe drought encountered during crop tours. Volcafe also expects a global arabica coffee deficit of -8.5 million bags for 2025/26, which is wider than the -5.5 million bag deficit projected for the current marketing year, 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.