Coffee Prices Rise Amid Weather Concerns and Inventory Tightness
Rainfall Issues in Brazil and Vietnam Impact Prices
December arabica coffee (KCZ24) is trading up +4.90 (+1.97%), while November ICE robusta coffee (RMX24) has risen +71 (+1.60%).
The increase in coffee prices follows a report from Somar Meteorologia indicating that Minas Gerais, Brazil’s largest arabica coffee region, received only 25.1 mm of rain last week, which is just 74% of the long-term average.
Additionally, robusta coffee prices benefited from tropical storm Trami, which brought significant rainfall to Vietnam’s vital coffee-growing area. This weather event may cause delays in the coffee harvest, traditionally scheduled from October to April.
Underpinning these price movements is growing concern over the longer-term impacts of drought conditions on Brazilian coffee crops. Since April, rainfall in Brazil has frequently fallen below average, particularly affecting coffee trees during their critical flowering period. This has diminished expectations for the 2025/26 arabica coffee crop. Notably, Brazil is experiencing its driest weather since 1981, as reported by Cemaden, a natural disaster monitoring center.
Inventory levels are further supporting coffee prices. As of October 3, ICE-monitored arabica coffee inventories dipped to a 4-1/2 month low of 795,874 bags, while robusta coffee inventories decreased to a 5-3/4 month low of 3,934 lots. Previously, on September 12, arabica inventories had peaked at a 1-1/2 year high of 858,474 bags, rebounding from a record low of 224,066 bags in November 2023. Meanwhile, robusta inventories reached a one-year high of 6,521 lots on July 25, recovering from a historic low of 1,958 lots in February 2024.
Contrary to this upward trend, the International Coffee Organization (ICO) reported on October 7 that global coffee exports increased by +6.5% year-on-year in August, totaling 10.92 million bags. For the period from October to August, global exports rose +9.9% year-on-year to 125.67 million bags. Additional data from Cecafe indicated a significant rise in Brazil’s green coffee exports, which increased by +34% year-on-year to 4.1 million bags in September. In a similar vein, Brazil’s total coffee exports for the 2023/24 season climbed +33% year-on-year to a record level of 47.3 million bags.
Robusta coffee prices reflect concerns about potential crop damage from ongoing dry conditions in Vietnam. The country’s agriculture department reported a -20% decrease in coffee production for the 2023/24 crop year, resulting in the smallest harvest in four years at 1.472 million metric tons. Projections from the USDA FAS on May 31 suggest that Vietnam’s robusta coffee output for the 2024/25 marketing year will slightly decline to 27.9 million bags, down from 28 million bags in the prior season. Vietnam’s September coffee exports also dropped -32.6% from the previous month, totaling 51,369 metric tons, while exports between January and September fell by -11.7% year-on-year to 1.1 million metric tons.
Adding to the complexities of the market, Brazil’s crop forecasting agency, Conab, revised its coffee production estimate downward on September 19 to 54.8 million bags, down from an earlier forecast of 58.8 million bags made in May.
However, the ICO’s report on May 3 indicated an increase in global coffee production for 2023/24, which rose +5.8% year-on-year to 178 million bags due to a strong off-biennial crop year. Overall consumption also climbed by +2.2% year-on-year to 177 million bags, leading to a surplus of 1 million bags for the current year.
The USDA’s bi-annual report on June 20 further suggested bearish momentum for coffee prices, predicting a +4.2% rise in global coffee production for 2024/25 to 176.235 million bags. This includes a +4.4% jump in arabica production to 99.855 million bags and a +3.9% increase for robusta to 76.38 million bags. Additionally, the report forecasted that ending stocks for the new marketing year would rise +7.7% to 25.78 million bags, up from 23.93 million bags in 2023/24. Brazil’s arabica production alone is projected to grow by +7.3% year-on-year to 48.2 million bags, driven by better yields and expanded acreage, while Colombia is expected to see a +1.6% increase in production to 12.4 million bags for the same period.
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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.
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