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July arabica coffee (KCN25) Monday closed up +3.50 (+0.98%), and July ICE robusta coffee (RMN25) closed up +82 (+1.85%).
Coffee prices on Monday shook off early losses and moved higher on strength in the Brazilian real. The real (^USDBRL) climbed to an 8-month high against the dollar Monday, discouraging export selling from Brazil’s coffee producers.
Coffee prices initially moved lower on Monday after above-normal rainfall in Brazil eased concerns about dryness. Somar Meteorologia reported Monday that Brazil’s biggest arabica coffee growing area of Minas Gerais, received 23.4 mm of rain the week ended June 7, 207% of the historical average for this time of year.
Coffee harvest pressures in Brazil are limiting the upside in coffee prices after Safras & Mercado reported that Brazil’s 2025/26 coffee harvest was 28% complete as of June 4, just above the five-year average of 27% for the same time of year.
Coffee prices have been under pressure over the past five weeks, with arabica coffee falling to a 2-month low last Tuesday and robusta dropping to a 7-1/4 month low due to concerns about higher coffee production and ample supplies. On May 19, the USDA’s Foreign Agricultural Service (FAS) forecast that Brazil’s 2025/26 coffee production will increase by 0.5% year-over-year (y/y) to 65 million bags and that Vietnam’s 2025/26 coffee output will rise by 6.9% y/y to 31 million bags. Brazil is the world’s largest producer of arabica coffee, and Vietnam is the world’s largest producer of robusta coffee.
An increase in ICE coffee inventories is undercutting coffee prices. ICE-monitored robusta coffee inventories rose to an 8-3/4 month of 5,438 lots on May 30. Also, ICE-monitored arabica coffee inventories rose to a 4-1/4 month high of 892,468 bags on May 27.
On May 9, the USDA forecasted that 2025/26 coffee production in Honduras, Central America’s largest coffee producer, would climb +5.1% y/y to 5.8 million bags. Also, consulting firm Safras & Mercado raised its Brazil 2025/26 coffee production estimate to 65.51 million bags from an earlier estimate of 62.45 million bags. In addition, Conab, Brazil’s crop forecasting agency, raised its Brazil 2025 coffee production estimate to 55.7 million bags from a January estimate of 51.81 million bags.
Demand concerns are bearish for coffee prices. Several global commodity importers, including Starbucks, Hershey, and Mondelez International, recently said the US’s baseline 10% tariff on imports would raise prices and further pressure sales volumes.
Smaller coffee exports from Brazil are bullish for prices. On May 12, Cecafe reported that Brazil’s April green coffee exports fell -28% y/y to 3.05 million bags, and Jan-Apr coffee exports fell -15.5% y/y to 13.186 million bags.
Robusta coffee has support from reduced robusta production. Due to drought, Vietnam’s coffee production in the 2023/24 crop year dropped by -20% to 1.472 MMT, the smallest crop in four years. Also, Vietnam’s General Statistics Office reported that 2024 Vietnam coffee exports fell -17.1% y/y to 1.35 MMT. Last Tuesday, Vietnam’s National Statistics Office reported that Vietnam’s 2025 Vietnam’s Jan-May coffee exports are down -1.8% y/y to 813,000 MT. In addition, the Vietnam Coffee and Cocoa Association on March 12 cut its 2024/25 Vietnam coffee production estimate to 26.5 million bags from a December estimate of 28 million bags. Conversely, the USDA’s FAS on May 19 projected that Vietnam’s 2025/26 coffee crop would climb +7% y/y to a 4-year high of 30 million bags.
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 its 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.
For the 2025/26 marketing year, Volcafe on December 17 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.
