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On Friday, December arabica coffee (KCZ25) closed up +12.65 (+3.35%) and November ICE robusta coffee (RMX25) rose +205 (+4.74%), reaching two-week highs. This surge comes amid concerns over dry weather in Brazil affecting the critical 2026/27 coffee crop, with Climatempo forecasting intensifying dry conditions and above-normal temperatures in Brazilian coffee-growing regions.
Recent data shows ICE-monitored arabica inventories fell to a 1.5-year low of 538,606 bags, while robusta inventories dropped to a 2.25-month low of 6,345 lots. The 50% tariffs on US imports from Brazil have contributed to tight supply, as approximately one-third of unroasted coffee in the U.S. is sourced from Brazil. Additionally, Brazil’s crop forecasting agency, Conab, revised its 2025 arabica coffee crop estimate down by 4.9% to 35.2 million bags.
Projected increases in global coffee production for 2025/26 stand at 178.68 million bags, but with a predicted arabica deficit of -8.5 million bags. Vietnam’s robusta coffee production is expected to be at a four-year high of 1.76 MMT, potentially offsetting bullish trends for coffee prices.
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