March arabica coffee (KCH25) today is up +0.60 (+0.16%), and March ICE robusta coffee (RMH25) is down -29 (-0.51%).
Coffee prices today are mixed, with arabica climbing to a new all-time nearest-futures high. Global coffee supply fears underpin prices after Conab, Brazil’s government crop forecasting agency, forecasted Tuesday that Brazil’s 2025/26 coffee crop would fall -4.4% y/y to a 3-year low of 51.81 million bags. Also, Conab last Tuesday cut its 2024 Brazil coffee crop estimate by -1.1% to 54.2 million bags from a September estimate of 54.8 million bags.
Coffee prices gave up some of their gains today, with robusta falling back from a new record nearest-futures high after a rally in the dollar index (DXY00) to a 1-week high sparked long liquidation in coffee.
Arabica coffee also has support from below-normal rainfall in Brazil after Somar Meteorologia reported Monday that Brazil’s biggest arabica coffee growing area of Minas Gerais received 26.5 mm of rain last week, or only 53% of the historical average.
The impact of dry El Nino weather last year may lead to longer-term coffee crop damage in South and Central America. Rainfall in Brazil has consistently been below average since last April, damaging coffee trees during the all-important flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop. Brazil has been facing the driest weather since 1981, according to the natural disaster monitoring center Cemaden. Also, Colombia, the world’s second-largest arabica producer, is slowly recovering from the El Nino-spurred drought last year.
Lingering global coffee supply concerns are supporting prices and fueling fund buying of coffee. On December 17, Volcafe cut its 2025/26 Brazil arabica coffee production estimate to 34.4 million bags, down by about 11 million bags from a September estimate after a crop tour revealed the severity of an extended drought in Brazil. Volcafe projects a global 2025/26 arabica coffee deficit of -8.5 million bags, wider than the -5.5 million bag deficit for 2024/25 and the fifth consecutive year of deficits.
Robusta coffee prices are underpinned by reduced robusta production. Due to drought, Vietnam’s coffee production in the 2023/24 crop year dropped by -20% to 1.472 MMT, the smallest crop in four years. The USDA FAS on May 31 projected that Vietnam’s robusta coffee production in the new marketing year of 2024/25 will dip slightly to 27.9 million bags from 28 million bags in the 2023/24 season. In addition, Vietnam’s General Statistics Office reported on January 10 that 2024 Vietnam coffee exports fell -17.1% y/y to 1.35 MMT. Conversely, the Vietnam Coffee and Cocoa Association on December 3 raised its 2024/25 Vietnam coffee production estimate to 28 million bags from an October estimate of 27 million bags.
An increase in robusta coffee inventories is bearish for prices after ICE-monitored robusta coffee inventories rose to a 3-3/4 month high last Friday of 4,603 lots. Meanwhile, ICE-monitored arabica coffee inventories rose to a 2-1/2 year high of 993,562 bags on January 6 but have since fallen back and dropped to a 2-month low of 885,886 bags Thursday.
News of larger global coffee exports is bearish for prices. On Tuesday, Conab reported that Brazil’s 2024 coffee exports rose +28.8% y/y to a record 50.5 million bags.
In a bearish factor, the International Coffee Organization (ICO) recently said that 2023/24 global coffee production climbed +5.8% y/y to a record 178 million bags due to an exceptional off-biennial crop year. ICO also said global 2023/24 coffee consumption rose +2.2% y/y to a record 177 million bags, resulting in a 1 million bag coffee surplus.
The USDA’s biannual report on December 18 was mixed for coffee prices. The USDA’s Foreign Agriculture Service (FAS) projected that world coffee production in 2024/25 will increase +4.0% y/y to 174.855 million bags, with a +1.5% increase in arabica production to 97.845 million bags and a +7.5% increase in robusta production to 77.01 million bags. The USDA’s FAS forecasts that 2024/25 ending stocks will fall by -6.6% to a 25-year low of 20.867 million bags from 22.347 million bags in 2023/24. Separately, the USDA’s FAS on November 22 projected Brazil’s 2024/25 coffee production at 66.4 MMT, below the USDA’s previous forecast of 69.9 MMT. The USDA’s FAS projects Brazil’s coffee inventories at 1.2 million bags at the end of the 2024/25 season in June, down -26% y/y.
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
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