Arabica coffee prices rose to a two-week high amid fears of reduced crop yields in Brazil due to insufficient rainfall, while robusta coffee prices fell as supply levels increased. Concerns regarding a global coffee surplus in the upcoming 2025/26 season and mixed production forecasts add complexity to the market dynamics.
Arabica coffee prices surged to a two-week high, closing up 1.10 or 0.28%, while robusta coffee experienced a decline of 30 or 0.548%. The increase in arabica prices is attributed to concerns about insufficient rainfall in Brazil, especially in Minas Gerais, which only received 71% of its historical average rainfall. Additionally, Cooxupe, Brazil’s largest arabica cooperative, noted adverse weather conditions impacting coffee yields this year.
Conversely, robusta coffee prices fell due to rising supply levels, as ICE-monitored robusta coffee inventories reached a one-and-a-half week high of 4,336 lots. In contrast, arabica coffee inventories dropped to a one-month low of 782,489 bags. Supply concerns continue to influence coffee prices, particularly following Pedro Cecafe’s report indicating a 12% year-on-year decrease in Brazil’s February green coffee exports. Furthermore, Brazil’s government crop forecasting agency, Conab, projected a 4.4% decline in the 2025/26 coffee production year.
Moreover, Marex Solutions cautioned that the global coffee surplus in the 2025/26 season could expand, emerging from previous estimates of a 200,000-bag surplus in the 2024/25 season. Reports from Vietnam, the leading robusta coffee producer, indicate a year-on-year increase of 6.6% in February coffee exports, conflicting with trends observed in Brazil.
The ramifications of the El Niño phenomenon from last year present potential long-term detriments to South and Central America’s coffee crops, as Brazil experiences one of its driest conditions since 1981. The resulting lack of rainfall has severely impacted coffee trees’ flowering stages, hindering production prospects for Brazil’s arabica coffee.
On the production front, Vietnamese coffee output for the 2023/24 crop year has encountered a 20% drop due to drought, necessitating an adjustment in the USDA’s forecasts for future production levels. Recent assessments indicate declining export volumes alongside reduced production estimates.
Despite these challenges, Brazil’s 2024 coffee exports soared by 28.8%, achieving record levels, although global coffee exports displayed negative trends in another report. The USDA’s December biannual report illustrated mixed projections, predicting an overall increase in world coffee production for 2024/25, with particular emphasis on rising arabica and robusta outputs. However, significant reductions in Brazil’s production forecasts were also noted, largely influenced by ongoing drought conditions.
Furthermore, the outlook for the 2025/26 marketing year worsened, with projections indicating an arabica coffee deficit of 8.5 million bags, exacerbating concerns stemming from weather-related challenges. It is essential to stay informed on market trends and supply chain dynamics, as these factors significantly influence coffee prices globally.
In conclusion, the recent surge in arabica coffee prices is primarily driven by adverse weather conditions in key producing regions, particularly Brazil. Ongoing concerns about reduced yields due to insufficient rainfall have spurred an outlook of potential deficits in future production. Conversely, robusta coffee faces challenges from increased supply. These developments underscore the complexities of global coffee markets, where weather events and production estimates play a pivotal role in shaping prices.
Original Source: www.nasdaq.com
