Coffee Prices Take a Hit Amid Global Supply Concerns
Coffee Futures Dip After Recent Highs
March arabica coffee (KCH25) today dropped -2.10 (-0.52%), while March ICE robusta coffee (RMH25) saw a decrease of -58 (-1.03%).
Today’s coffee prices are lower, influenced by a stronger dollar (DXY00), which triggered some traders to sell coffee futures. Over the past month, coffee prices surged, with arabica hitting an unprecedented closest-futures high on Thursday and robusta achieving a record high last Friday.
A persistent concern about global coffee supplies is keeping prices supported. Last week, Conab, Brazil’s government crop forecasting agency, projected a -4.4% year-on-year decrease in Brazil’s 2025/26 coffee crop, forecasting a three-year low of 51.81 million bags. Additionally, Conab revised its estimate for Brazil’s 2024 crop down by -1.1% to 54.2 million bags from a previous estimate of 54.8 million bags.
Supportive factors for prices include smaller global coffee exports. The International Coffee Organization (ICO) reported that December global coffee exports fell -12.4% compared to last year, totaling 10.73 million bags, while exports from October to December are down -0.8% year-on-year to 32.25 million bags.
The Brazilian real’s strength (^USDBRL) is also a positive indicator for coffee prices, reaching a nearly three-month high against the dollar. A stronger real typically discourages Brazilian coffee producers from selling exports.
However, robusta coffee faced a challenge with a report from the Vietnam General Statistics Office revealing a +6.3% month-on-month rise in coffee exports for January, amounting to 134,000 metric tons. As the world’s leading robusta producer, Vietnam’s activities greatly influence market dynamics.
Weather conditions have also played a role in coffee production. In Brazil, recent heavy rainfall alleviated dryness concerns. Somar Meteorologia noted that the Minas Gerais region, Brazil’s largest arabica coffee growing area, received 119 mm of rain last week, which is 203% of the historical average.
El Niño’s dry conditions from the previous year may have longer ramifications for coffee crops in South and Central America. Since last April, Brazil has experienced below-average rainfall, impacting coffee trees during the critical flowering stage, which affects prospects for the 2025/26 arabica crop. According to Cemaden, Brazil has encountered its driest weather in over four decades. Colombia, the second-largest arabica producer, is similarly on the mend from last year’s drought conditions.
Robusta prices are being influenced by reduced production levels. Drought conditions have led to a -20% drop in Vietnam’s coffee production for the 2023/24 crop year, now at 1.472 million metric tons—the lowest output in four years. The USDA Foreign Agriculture Service (FAS) predicted a slight decrease in Vietnam’s robusta production in the 2024/25 marketing year to 27.9 million bags, down from 28 million in 2023/24. In contrast, a report on January 10 showed a -17.1% year-on-year decline in 2024 Vietnam coffee exports, totaling 1.35 million metric tons. Conversely, the Vietnam Coffee and Cocoa Association revised its 2024/25 coffee production estimate upward to 28 million bags from an earlier estimate of 27 million bags.
Meanwhile, a rise in robusta coffee inventories suggests bearish trends for prices, with ICE-monitored robusta coffee inventories reaching a four-month high of 4,603 lots last Friday. On the other hand, arabica coffee inventories peaked at a two-and-a-half-year high of 993,562 bags on January 6 before falling to a three-month low of 847,805 bags as of Wednesday.
Overall, news concerning increased global coffee exports remains a bearish signal. Conab reported that Brazil’s 2024 coffee exports rose +28.8% year-on-year, reaching a record 50.5 million bags.
According to the ICO, global coffee production for 2023/24 increased +5.8% year-on-year to a record 178 million bags due to an exceptional off-biennial crop year. Global consumption also rose +2.2% year-on-year to a record 177 million bags, resulting in a surplus of 1 million bags.
The USDA’s biannual report on December 18 presented a mixed outlook for coffee prices. It projected a +4.0% rise in world coffee production for 2024/25 to 174.855 million bags, with arabica production increasing by +1.5% to 97.845 million bags and robusta output rising by +7.5% to 77.01 million bags. However, the USDA forecasts a -6.6% decline in ending stocks for 2024/25, hitting a 25-year low of 20.867 million bags.
For the 2025/26 marketing year, Volcafe lowered its Brazil arabica coffee production estimate on December 17, now projecting it at 34.4 million bags—around 11 million fewer bags compared to a prior estimate from September after assessments revealed serious drought impacts. Volcafe predicts a global arabica coffee deficit of -8.5 million bags for 2025/26, which is larger than the -5.5 million bag deficit anticipated for 2024/25, marking the fifth consecutive year of deficits.
On the date of publication,
Rich Asplund
did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For further disclosure, please view the Barchart Disclosure Policy
here.
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