“`html
On Thursday, December arabica coffee (KCZ25) closed down $5.80 (-1.51%), while November ICE robusta coffee (RMX25) declined $81 (-1.84%). This drop in coffee prices was attributed to a weaker Brazilian real, which fell to a 2.5-week low against the dollar, prompting long liquidation in coffee futures and encouraging export sales from Brazilian producers.
Recent rainfall in Brazil’s Minas Gerais region provided 25.9 mm of rain (104% of the historical average), leading to expectations of improved crop yields, which typically depress prices. Additionally, Vietnam is expected to see a 6% year-on-year increase in its 2025/26 coffee production, reaching 1.76 million metric tons (MMT), compounded by heavy rains causing flooding and access issues for farmers in the Central Highlands.
Coffee inventories fell significantly, with ICE arabica inventories dropping to a 1.5-year low of 547,036 bags and robusta inventories reaching a 2.25-month low of 6,345 lots. Furthermore, U.S. tariffs of 50% on imports from Brazil have intensified supply tightening, as roughly one-third of unroasted coffee in the U.S. originates from Brazil.
“`
