Arabica Coffee Prices Rise Amid Weather Challenges in Brazil
Arabica coffee prices have climbed, reaching a two-week high due to insufficient rainfall in Brazil affecting crop yields. In contrast, robusta prices have dropped as inventories rise. Continued concerns regarding coffee supply and production forecasts may influence global coffee prices significantly moving into future seasons.
As of today, May arabica coffee prices (KCK25) have increased by 0.30 (0.08%), while May robusta coffee prices (RMK25) have decreased by 21 (-0.38%). The price fluctuation reflects mixed trends—arabica has reached a two-week high due to unfavorable weather conditions affecting Brazil’s coffee crops, while robusta coffee prices have declined following a rise in inventories.
Weather reports indicate that Brazil’s major arabica-growing region, Minas Gerais, received only 30.8 mm of rain—substantially below the historical average of 71%. An announcement from Cooxupe, Brazil’s largest arabica coffee co-operative, warned that high temperatures coupled with below-average rainfall last month could adversely impact coffee yields this year, contributing to arabica’s price increase.
Conversely, robusta coffee prices fell as ICE-monitored inventories rose to a one-and-a-half-week high of 4,336 lots. In stark contrast, arabica coffee inventories decreased to a three-and-a-half-week low of 782,648 bags, underscoring continued supply concerns which support coffee prices across the board.
According to Cecafe, Brazil’s green coffee exports decreased by 12% year-on-year to 3 million bags in February. Also, Brazil’s government agency Conab projected a 4.4% year-on-year decline in the 2025/26 coffee crop, anticipating a total output of 51.81 million bags.
However, Marex Solutions indicated a potential global coffee surplus in the 2025/26 season, forecasting an expansion to 1.2 million bags from 200,000 bags in the 2024/25 season. This outlook presents a bearish trend for overall coffee prices.
Robusta coffee prices have struggled partly due to decreased production in Vietnam, the leading producer of robusta beans. The 2023/24 crop year saw production drop by 20% to 1.472 million metric tons. Projections for 2024/25 suggest a slight decline to 27.9 million bags, further stressing robusta supply.
Recent reports indicate larger global coffee exports, which can negatively affect prices. Conab noted a record increase of 28.8% year-on-year in Brazil’s 2024 coffee exports, totaling 50.5 million bags. However, the International Coffee Organization (ICO) observed a 12.4% decrease in December global coffee exports compared to last year.
The USDA’s biannual report revealed both positive and negative indicators for coffee prices, forecasting a 4% increase in global coffee production in 2024/25 to 174.855 million bags but also predicting a decline in ending stocks to a 25-year low. Brazil’s production estimates were adjusted downwards amid ongoing adverse weather conditions, highlighting continuing tight conditions within the arabica market.
As per Volcafe’s evaluation, Brazil’s arabica production estimate for 2025/26 was lowered to 34.4 million bags due to severe drought conditions. Their projection indicates an arabica coffee deficit of 8.5 million bags, marking the fifth consecutive year of deficits, which could keep coffee prices elevated.
This article was written by Rich Asplund, who currently holds no direct or indirect positions in the mentioned securities. All data presented is for informational purposes only, and further disclosures are available through the Barchart Disclosure Policy.
In summary, arabica coffee prices are rising due to adverse weather impacting Brazil’s coffee yield, while robusta prices decline amid increased inventories. Concerns over future global coffee supply remain, as multiple sources indicate production declines. Prices will likely stay pressured by forecasts of substantial deficits and reduced production amidst prolonged drought conditions in significant producing regions.
Original Source: www.nasdaq.com
