Key Takeaways: Coffee Market Trends
- Coffee prices experienced a dip due to the European Parliament’s decision to delay the deforestation law.
- Weather concerns in Brazil and Vietnam are providing some support to coffee prices amid fears of reduced output.
- Declining ICE coffee inventories, influenced by tariffs on Brazilian imports, may lead to tightening supplies.
- Projections of increased coffee production in Brazil for the 2026/27 marketing year could exert downward pressure on prices.
- Global coffee export data indicates a slight year-on-year decrease, potentially supporting prices.
Coffee Prices Decline Amid Regulatory Changes
Coffee prices settled lower on Wednesday following the European Parliament’s approval of a one-year delay to the deforestation law. This decision is expected to maintain ample global coffee supplies.
The EU regulation, known as EUDR, aims to combat deforestation in countries exporting key commodities like soybeans, coffee, and cocoa to the EU. The delay allows EU countries to continue importing agricultural products from regions where deforestation is present, such as parts of Africa, Indonesia, and South America.
đź’ˇ Tip: Keep an eye on policy changes. Regulations like the EUDR can significantly impact global supply chains and commodity prices, including coffee.
Weather Concerns Impacting Arabica and Robusta Coffee
The drop in coffee prices was limited due to adverse global weather events that threaten to curb coffee output. Arabica coffee is receiving price support from dryness concerns in Brazil. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-growing area, received only 26.4 mm of rain during the week ending November 21, which is 49% of the historical average.
Robusta coffee is getting support from forecasts of heavy showers in Vietnam’s Dak Lak province, which is the country’s biggest coffee-growing region. These heavy showers are expected to further delay the harvest.
đź“Ť Analytical Insight: Monitor weather patterns in key coffee-producing regions. Adverse weather can disrupt harvests and significantly influence coffee prices.
Shrinking Coffee Inventories Offer Support
Shrinking ICE coffee inventories are providing support to prices. Tariffs imposed on U.S. coffee imports from Brazil have led to a sharp drawdown in ICE coffee inventories. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags last Thursday, and ICE robusta coffee inventories fell to a 6.25-month low of 4,911 lots on Wednesday.
âś… Actionable Tip: Track ICE coffee inventories. Declining inventories can signal tightening supplies and potential price increases.
Brazilian Crop Forecast and Vietnamese Coffee Supply
StoneX forecast that Brazil will produce 70.7 million bags of coffee in the new 2026/27 marketing year, including 47.2 million bags of arabica, a 29% year-over-year increase. Increased Vietnamese coffee supplies are also bearish for prices.
Vietnam’s coffee exports increased by 13.4% year-over-year from January to October 2025, reaching 1.31 MMT. The country’s 2025/26 coffee production is projected to climb 6% year-over-year to 1.76 MMT, or 29.4 million bags, a four-year high. If weather conditions remain favorable, Vietnam’s coffee output in 2025/26 will be 10% higher than the previous crop year.
⚡ Quick Question: How do production forecasts influence trading strategies? Answer: Anticipating increased supply often leads to bearish sentiment among traders, potentially driving down prices.
Signs of Tighter Global Coffee Supply
Signs of tighter global coffee supplies are supportive of prices, as the International Coffee Organization (ICO) reported that global coffee exports for the current marketing year (October-September) fell 0.3% year-over-year to 138.658 million bags.
Coffee prices found support after Conab, Brazil’s crop forecasting agency, cut its Brazil 2025 arabica coffee crop estimate by 4.9% to 35.2 million bags from a May forecast of 37.0 million bags. Conab also reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, from a May estimate of 55.7 million bags.
đź“Š Data Point: The ICO report on global coffee exports provides key insights into supply dynamics, which can influence price movements.
USDA Forecasts Increase in World Coffee Production
The USDA’s Foreign Agriculture Service (FAS) projected that world coffee production in 2025/26 will increase by 2.5% year-over-year to a record 178.68 million bags, with a 1.7% decrease in arabica production to 97.022 million bags and a 7.9% increase in robusta production to 81.658 million bags.
FAS forecasts that Brazil’s 2025/26 coffee production will increase by 0.5% year-over-year to 65 million bags and that Vietnam’s 2025/26 coffee output will rise by 6.9% year-over-year to a four-year high of 31 million bags. FAS forecasts that 2025/26 ending stocks will climb by 4.9% to 22.819 million bags from 21.752 million bags in 2024/25.
đź“Ś Key Consideration: USDA forecasts can provide a broad overview of future coffee market trends, helping stakeholders make informed decisions.
Frequently Asked Questions about Coffee Market
What factors are currently influencing coffee prices?
Coffee prices are influenced by a combination of factors including weather conditions in key growing regions like Brazil and Vietnam, regulatory changes such as the EU deforestation law, and inventory levels. Production forecasts and export data also play a significant role in determining price trends.
How does the EU deforestation law impact the coffee market?
The EU deforestation law (EUDR) aims to prevent the import of commodities linked to deforestation. Delays or changes in this regulation can affect the flow of coffee supplies from certain regions, influencing global availability and prices.
What role do weather conditions play in coffee production?
Weather conditions are critical for coffee production. Dryness in Brazil, for example, can harm arabica crops, while heavy rains in Vietnam can delay robusta harvests. These disruptions can lead to reduced supply and higher prices.
How do coffee inventories affect prices?
Declining coffee inventories, especially in major exchanges like ICE, can signal tightening supplies, which tend to push prices upward. Conversely, rising inventories may indicate ample supply and potentially lead to price declines.
What’s the Outlook for Coffee Prices?
Coffee prices are subject to a complex interplay of factors. Regulatory changes, weather patterns, and shifts in supply and demand all contribute to market volatility. Monitoring these elements is crucial for understanding potential price movements.
While short-term fluctuations are common, the long-term outlook for coffee prices will depend on the ability of major producing nations to adapt to climate change, comply with evolving environmental regulations, and meet the changing preferences of consumers.
