Coffee Prices Surge Amidst Crop Concerns
March arabica coffee (KCH25) has climbed by +11.55 (+3.50%), while January ICE robusta coffee (RMF25) increased by +156 (+2.97%).
Today, coffee prices are significantly up, with March arabica reaching a contract high and December nearest-futures (Z24) also hitting a record high. Additionally, robusta coffee has risen to a one-week peak.
The surge in prices primarily stems from a revised outlook on Brazil’s coffee crop. Volcafe has reduced its 2025/26 production estimate for Brazilian arabica coffee to 34.4 million bags, a drop of roughly 11 million bags from its September forecast. This revision follows a crop tour that highlighted the seriousness of Brazil’s ongoing drought. Volcafe now anticipates a global arabica coffee deficit of 8.5 million bags for 2025/26—an increase from the 5.5 million bag deficit expected for 2024/25, marking the fifth consecutive year of deficits.
Robusta coffee’s price increase has also been bolstered by recent data from Vietnam. The Vietnam General Statistics Office reported a drastic 49.1% year-over-year decrease in coffee exports for November, totaling only 60,000 metric tons. Cumulatively, coffee exports from January to November have declined by 14.3% year-over-year, reaching 1.2 million metric tons. Continuous rain in Vietnam has flooded coffee fields, causing delays in the robusta harvest as the country, the leading robusta producer, begins its coffee season.
Adverse weather conditions in both Brazil and Vietnam, the world’s largest coffee producers, are casting a shadow over global coffee supplies. According to Sucden Financial, this escalation in prices has led some Brazilian coffee exporters to unwind their hedges and purchase coffee futures to cover short positions, further driving prices upward.
The lingering effects of dry El Niño conditions earlier this year could harm coffee crops in South and Central America in the long run. In Brazil, rainfall has consistently fallen below average since April, damaging coffee trees during the crucial flowering period and limiting the potential yield for the 2025/26 arabica coffee crop. Cemaden, the national disaster monitoring center, reports that Brazil is experiencing its driest weather since 1981. Meanwhile, Colombia, the second-largest arabica producer globally, is slowly rebounding from drought conditions attributed to El Niño.
Minas Gerais, the largest arabica coffee-producing region in Brazil, recorded rainfall at just 91% of the historical average last week, which may stifle the country’s coffee output and support higher prices moving forward.
Robusta coffee prices are also benefiting from decreased production levels. Vietnam’s robusta coffee 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’s Foreign Agriculture Service projected on May 31 that robusta production could drop slightly to 27.9 million bags in the 2024/25 marketing year from 28 million bags in the 2023/24 season. In contrast, the Vietnam Coffee and Cocoa Association revised its 2024/25 production forecast upward to 28 million bags from an earlier estimate of 27 million bags.
Meanwhile, prices are also being supported by prior data from November 22, when the USDA’s Foreign Agricultural Service estimated Brazil’s 2024/25 coffee production at 66.4 million metric tons, down from its previous figure of 69.9 million. Additionally, Brazil’s coffee inventories are expected to decrease to around 1.2 million bags by the end of the 2024/25 season, representing a 26% year-over-year decline.
Future projections indicate potential gains in global coffee supplies, which may lead prices to soften. Last Thursday, the International Coffee Organization (ICO) announced a 15.1% year-over-year increase in October global coffee exports, totaling 11.13 million bags. Furthermore, global coffee exports for the 2023/24 period (October to September) rose by 11.7% year-over-year to 137.27 million bags.
Despite tightening coffee inventories, which help prop up prices, bearish data from Brazil could impact the market. Cecafe reported that Brazil’s green coffee exports increased by 2.7% year-over-year to 4.29 million bags. The 2023/24 export total in Brazil rose by 33% year-over-year, achieving a record 47.3 million bags.
However, the ICO recently projected that worldwide coffee production for 2023/24 will increase by 5.8% year-over-year, reaching a record 178 million bags. Coffee consumption is also expected to rise by 2.2% year-over-year to a record 177 million bags, creating a surplus of one million bags.
In a bearish development, the USDA’s biannual report published on June 20 also projected a 4.2% increase in coffee production for 2024/25, reaching 176.235 million bags. This includes a 4.4% rise in arabica production to 99.855 million bags and a 3.9% growth in robusta production to 76.38 million bags, with expected ending stocks climbing by 7.7% to 25.78 million bags.
On the date of publication,
Rich Asplund
did not hold (either directly or indirectly) any positions in the securities discussed in this article. All information and data in this article are for informational purposes only. For more information, please refer to the Barchart Disclosure Policy
here.
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