Coffee Prices Drop Amid Record Brazilian Exports
March arabica coffee (KCH25) today is down -2.10 (-0.64%), and March ICE robusta coffee (RMH25) is down -5 (-0.10%).
Brazil’s Coffee Exports Hit Record Highs
Coffee prices declined today after starting strong, driven lower by Brazil’s record-high coffee exports. Cecafe reported late Wednesday that Brazil’s arabica coffee exports for 2024 increased by +20% year-on-year to a record 37 million bags. Additionally, robusta exports jumped +98% year-on-year to a record 9.4 million bags.
Weather Conditions Impact Arabica Prices
Earlier this week, arabica coffee surged to a three-week high due to dry conditions in Brazil. According to Somar Meteorologia, the key coffee-growing region of Minas Gerais received a mere 29.6 mm of rain last week, just 31% of the historical average. Meanwhile, robusta prices hit a two-week low before bouncing back, showing signs of ample supplies from Vietnam. The General Department of Vietnam Customs reported that December coffee exports surged +102.6% year-on-year to 127,655 metric tons.
Increasing Inventories Weigh on Prices
Growing inventories are also a bearish factor for coffee prices. Last Monday, ICE-monitored arabica coffee inventories rose to their highest level in 2.5 years, reaching 993,562 bags. In addition, robusta coffee inventories increased to a three-month high of 4,415 lots last Wednesday.
Understanding Recent Price Trends
Recently, coffee prices rallied sharply due to expectations of a smaller Brazilian crop. March arabica prices reached a contract high, while the nearest Dec coffee futures (Z24) posted a record high. This surge followed Volcafe’s December 17 announcement, which cut its 2025/26 Brazil arabica coffee production estimate to 34.4 million bags, down 11 million bags from September after assessing the impact of an ongoing drought. They anticipate a global 2025/26 arabica coffee deficit of 8.5 million bags, marking the fifth consecutive year of deficits.
Impact of Drought on Future Production
Consultancy group Safras & Mercado also weighed in, estimating on December 20 that the 2025/26 Brazilian coffee crop would be 62.45 million bags, down 5% year-on-year. They predict a -15% year-on-year decrease in arabica production to 38.35 million bags, while estimating robusta production at 24.1 million bags.
Long-Term Effects of El Nino on Crop Production
The dry El Niño conditions from last year may continue to harm coffee crops in South and Central America. Brazil has consistently faced below-average rainfall since April, which has stressed coffee trees during their critical flowering stage. This poses ongoing challenges for Brazil’s 2025/26 arabica coffee output. Additionally, Colombia, the second-largest arabica producer, is gradually recovering from last year’s drought.
Robusta Production Declines in Vietnam
Robusta coffee prices are finding support amid decreased production. Vietnam’s robusta output for the 2023/24 crop year fell by -20% to 1.472 million metric tons, marking the smallest crop in four years. The USDA FAS predicted a slight dip to 27.9 million bags for Vietnam’s robusta coffee in the 2024/25 marketing year. However, the Vietnam Coffee and Cocoa Association has recently increased its production estimate for that period from 27 million to 28 million bags.
Global Coffee Export Trends
Increasing global coffee exports are exerting downward pressure on prices. The International Coffee Organization (ICO) reported on December 5 that worldwide coffee exports for the start of the 2024/25 season rose by +15.1% year-on-year to 11.13 million bags. For the 2023/24 season, exports increased by +11.7% year-on-year to 137.27 million bags. Brazilian exports alone rose by +30.2% year-on-year, reaching a record 46.3 million bags.
Mixed Outlook from USDA Report
The USDA’s biannual report released on December 18 presents a mixed outlook for coffee prices. It projected a world coffee production increase of +4.0% year-on-year for 2024/25, estimating total output at 174.855 million bags. While arabica production is expected to rise by +1.5% to 97.845 million bags, robusta production could increase by +7.5% to 77.01 million bags. The projected ending stocks for 2024/25 would fall by -6.6% to a 24-year low of 20.867 million bags.
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.
