Coffee Prices Decline Amid Economic Concerns and Supply Issues
May arabica coffee (KCK25) on Tuesday closed down -8.90 (-2.31%), while May ICE robusta coffee (RMK25) ended down -143 (-2.58%).
The decline in coffee prices on Tuesday was largely due to worries about consumer spending, highlighted by a significant -7.0 point fall in the US consumer confidence index, reaching an 8-month low of 98.3. Additionally, arabica prices dipped to a new 3-week low, subjected to ongoing long liquidation after a brief rally from late January to early February.
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Over recent sessions, arabica prices faced challenges as ICE-monitored arabica inventories increased to 803,066 bags, recovering from the previous week’s 9-month low of 758,514 bags.
In contrast, robusta coffee inventories, which reached a 5-month high of 4,603 lots on January 31, experienced a drop to a 2-month low of 4,297 lots by February 18, only to recover slightly to 4,312 lots on Tuesday.
Weather patterns also played a role, as below-average rainfall in Brazil provided some support for coffee pricing. Somar Meteorologia reported that Brazil’s largest arabica coffee region, Minas Gerais, received only 11.4 mm of rain last week, or 24% of the historical average. Brazil remains the largest arabica coffee producer globally.
Notably, a greater percentage of Brazil’s coffee harvest has been sold this year. Safras & Mercado noted that 88% of the 2024/25 harvest was sold by February 11, surpassing last year’s figure of 79% and the 5-year average of 82%. However, the slow sales for the 2025/26 crop at just 13% indicate producers are holding onto supply.
Fears of continued supply issues are driving prices. Cecafe reported a -1.6% decline in Brazil’s January green coffee exports year-over-year, totaling 3.98 million bags. Additionally, the government crop forecaster Conab predicts that Brazil’s coffee output for 2025/26 will decline -4.4% from the previous year to a 3-year low of 51.81 million bags. They also adjusted their 2024 forecast downward by -1.1% to 54.2 million bags.
The effects of last year’s dry El Nino weather may also lead to long-term damage to coffee crops across South and Central America. Brazil has reported inconsistent rainfall since last April, hindering coffee tree development at a crucial flowering stage, which affects the 2025/26 arabica coffee harvest. According to Cemaden, Brazil is experiencing its most severe drought since 1981. Colombia, the second-largest producer of arabica coffee, is still recuperating from last year’s drought caused by El Nino.
Robusta prices are being supported by reduced production levels as well. Due to drought conditions, Vietnam’s coffee production for the 2023/24 crop year fell by -20% to 1.472 million metric tons, marking the smallest harvest in four years. The USDA FAS has also projected a slight decrease in Vietnam’s robusta production for the 2024/25 marketing year, dipping from 28 million bags in 2023/24 to 27.9 million bags. On the other hand, Vietnam’s coffee exports saw a -17.1% annual reduction to 1.35 million metric tons as reported on January 10.
Contrastingly, reports of increased global coffee exports are putting downward pressure on prices. Conab announced a +28.8% year-over-year rise in Brazil’s coffee exports for 2024, reaching a record 50.5 million bags. Vietnam also experienced a +6.3% month-over-month increase in January coffee exports, totaling 134,000 metric tons. Despite this, the International Coffee Organization reported a drop in global coffee exports, with December figures down -12.4% year-over-year to 10.73 million bags.
The USDA’s biannual report released on December 18 presents a mixed outlook for coffee prices. They forecast a +4.0% increase in world coffee production for 2024/25, reaching 174.855 million bags, with arabica production increasing by +1.5% to 97.845 million bags, and robusta production rising by +7.5% to 77.01 million bags. However, ending stocks are expected to decline by -6.6% to a 25-year low of 20.867 million bags.
For the 2025/26 marketing year, Volcafe reduced its Brazil arabica coffee production estimate to 34.4 million bags, roughly 11 million bags lower than previous projections after a crop assessment indicated severe drought effects. There is a forecasted global shortage of arabica coffee in 2025/26, with an estimated deficit of -8.5 million bags, widening from the -5.5 million bag deficit anticipated for 2024/25, marking the fifth consecutive year of shortages.
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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