Coffee prices today are mixed as they gave up an early advance after a selloff in global equity markets sparked risk-off sentiment in asset markets and prompted long liquidation in coffee futures. An increase in robusta coffee inventories is bearish for prices after ICE-monitored robusta coffee inventories rose to a 3-3/4 month high Friday of 4,603 lots.
Coffee prices initially extended their 3-1/2 month-long rally, with arabica posting a new record nearest-futures high today and robusta posting a 2-month high. Lingering global coffee supply concerns are supporting prices and fueling fund buying of coffee.
On December 17, Volcafe cut its 2025/26 Brazil arabica coffee production estimate to 34.4 million bags, down by about 11 million bags from a September estimate after a crop tour revealed the severity of an extended drought in Brazil. Volcafe projects a global 2025/26 arabica coffee deficit of -8.5 million bags, wider than the -5.5 million bag deficit for 2024/25 and the fifth consecutive year of deficits.
A bullish factor for coffee was last Tuesday’s action by Conab, Brazil’s government crop forecasting agency, to cut its 2024 Brazil coffee crop estimate by -1.1% to 54.2 million bags from a September estimate of 54.8 million bags.
Arabica coffee also has support from below-normal rainfall in Brazil after Somar Meteorologia reported today that Brazil’s biggest arabica coffee growing area of Minas Gerais received 26.5 mm of rain last week, or only 53% of the historical average.
Coffee prices saw support after consultancy group Safras & Mercado on December 20 estimated the 2025/26 Brazilian coffee crop at 62.45 million bags, down -5% yr/yr. Safras predicts that arabica output will fall by 15% yr/yr to 38.35 million bags due to drought and that robusta production will be 24.1 million bags.
The impact of dry El Nino weather last year may lead to longer-term coffee crop damage in South and Central America. Rainfall in Brazil has consistently been below average since last April, damaging coffee trees during the all-important flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop. Brazil has been facing the driest weather since 1981, according to the natural disaster monitoring center Cemaden. Also, Colombia, the world’s second-largest arabica producer, is slowly recovering from the El Nino-spurred drought last year.
ICE-monitored arabica coffee inventories rose to a 2-1/2 year high of 993,562 bags on January 6 but have since fallen back and dropped to a 6-week low of 928,935 bags last Friday.
News of larger global coffee exports is bearish for prices. On December 5, the International Coffee Organization (ICO) reported that Oct global coffee exports for the beginning of the 2024/25 season rose +15.1% y/y to 11.13 mln bags. Global coffee exports for 2023/24 (Oct-Sep) rose +11.7% y/y to 137.27 mln bags. Also, Brazilian coffee export news has been bearish. Cecafe reported last Wednesday that Brazil’s 2024 coffee exports rose +30.2% y/y to a record 46.3 million bags.
In a bearish factor, the International Coffee Organization (ICO) recently said that 2023/24 global coffee production climbed +5.8% y/y to a record 178 million bags due to an exceptional off-biennial crop year. ICO also said global 2023/24 coffee consumption rose +2.2% y/y to a record 177 million bags, resulting in a 1 million bag coffee surplus.
The USDA’s biannual report on December 18 was mixed for coffee prices. The USDA’s Foreign Agriculture Service (FAS) projected that world coffee production in 2024/25 will increase +4.0% y/y to 174.855 million bags, with a +1.5% increase in arabica production to 97.845 million bags and a +7.5% increase in robusta production to 77.01 million bags. The USDA’s FAS forecasts that 2024/25 ending stocks will fall by -6.6% to a 25-year low of 20.867 million bags from 22.347 million bags in 2023/24. Separately, the USDA’s FAS on November 22 projected Brazil’s 2024/25 coffee production at 66.4 MMT, below the USDA’s previous forecast of 69.9 MMT. The USDA’s FAS projects Brazil’s coffee inventories at 1.2 million bags at the end of the 2024/25 season in June, down -26% y/y.
–barchart
