Key Takeaways: Coffee Market Update
- Arabica coffee prices saw a boost due to dryness concerns in Brazil, particularly in the Minas Gerais region.
- Robusta coffee prices increased following forecasts of heavy rainfall in Vietnam’s Dak Lak province, potentially delaying harvests.
- Declining ICE coffee inventories, influenced by tariffs on US coffee imports from Brazil, are lending support to higher prices.
- Projections of increased coffee production in Brazil for the 2026/27 marketing year, if realized, could exert downward pressure on prices.
- Global coffee exports have experienced a slight year-over-year decrease, signaling potentially tighter supplies.
Coffee prices experienced a notable surge recently, with March arabica coffee closing up +1.79% and January ICE robusta coffee rising by +2.38%. This upward movement reflects growing anxieties surrounding global coffee crop yields.
Arabica coffee prices are currently finding support due to concerns about dryness in key Brazilian growing regions. Specifically, Minas Gerais, the largest area for arabica cultivation in Brazil, received only 26.4 mm of rain during a recent week, which is just 49% of the historical average for that period.
Robusta coffee has also seen gains, fueled by forecasts of substantial rainfall in Vietnam’s Dak Lak province. This region is the heart of Vietnamese coffee production, and heavy rains are expected to cause delays in the harvest.
💡Insight: Weather patterns significantly influence coffee prices. Monitoring key growing regions like Minas Gerais in Brazil and Dak Lak in Vietnam helps in understanding potential supply disruptions and price volatility.
Coffee Prices Affected by Inventory Drawdowns
Diminishing ICE coffee inventories are also contributing to price support. The imposition of US tariffs on coffee imports from Brazil has triggered a considerable reduction in these inventories. Arabica inventories monitored by ICE have dropped to a 1.75-year low, while robusta inventories have reached a 4.5-month low.
American buyers have been avoiding new contracts for Brazilian coffee due to these tariffs, which, in turn, is tightening US supplies. Approximately one-third of America’s unroasted coffee comes from Brazil. Purchases of Brazilian coffee by the US have decreased by 52% during the period when tariffs took effect, compared to the previous year.
📌 Remember: Tariffs and trade policies can significantly impact commodity prices by influencing supply chains and inventory levels. The US tariffs on Brazilian coffee are a prime example.
Impact of Trade Policies and Production Forecasts on Coffee
The recent tumble in arabica coffee prices to a 7-week low followed the signing of an executive order exempting Brazilian food products, including coffee, from tariffs. This policy shift highlights the sensitivity of coffee prices to trade-related announcements.
StoneX has projected a substantial increase in Brazil’s coffee production for the 2026/27 marketing year, forecasting a total of 70.7 million bags, including 47.2 million bags of arabica. This represents a significant year-over-year increase.
⚡ Tip: Keep an eye on production forecasts from major coffee-producing countries like Brazil and Vietnam. These projections can provide insight into future supply levels and potential price trends.
Vietnamese Coffee Supply and Global Export Trends
Increased coffee supplies from Vietnam are also a factor influencing prices. Vietnam’s coffee exports have risen considerably, and the country’s 2025/26 coffee production is projected to climb, reaching a 4-year high.
The Vietnam Coffee and Cocoa Association has indicated that if weather conditions remain favorable, Vietnam’s coffee output could be even higher. Vietnam holds the position of the world’s largest producer of robusta coffee.
✅ Actionable Advice: Diversify your sources of information. Monitoring reports from organizations like the ICO and national statistics offices in key producing countries (e.g., Vietnam) provides a comprehensive view of the coffee market.
Global Coffee Supplies and Crop Estimates
Signs of tighter global coffee supplies offer some support to prices. The International Coffee Organization reported a slight year-over-year decrease in global coffee exports for the current marketing year.
Coffee prices also received support when Conab, Brazil’s crop forecasting agency, reduced its Brazil 2025 arabica coffee crop estimate. This reduction points to potential supply constraints.
📍 Key Point: Crop estimates and export data are crucial indicators of supply and demand dynamics in the coffee market. Significant revisions to these figures can trigger price reactions.
Understanding Coffee Market Influences
The USDA’s Foreign Agriculture Service (FAS) has projected an increase in world coffee production for 2025/26. They foresee a record output, driven by an increase in robusta production, while arabica production is expected to decrease slightly. FAS also forecasts an increase in ending stocks.
Overall, the coffee market is subject to a complex interplay of factors, including weather conditions, trade policies, production forecasts, export trends, and inventory levels. These elements collectively shape the dynamics of coffee prices.
📊 Analytical Insight: Consider both supply-side and demand-side factors when assessing the coffee market. While increased production can put downward pressure on prices, strong demand and tight inventories can offset this effect.
Frequently Asked Questions about Coffee Market Dynamics
What Factors Influence Coffee Bean Prices?
Coffee prices are influenced by a variety of factors, including weather conditions in key growing regions, trade policies and tariffs, production forecasts from countries like Brazil and Vietnam, global export trends, and inventory levels held by exchanges such as ICE. Any disruption in supply or changes in demand can affect prices.
How Do Tariffs Impact the Coffee Market?
Tariffs can significantly alter the flow of coffee between countries, leading to changes in supply and demand dynamics. For instance, tariffs imposed on US coffee imports from Brazil have led to a drawdown in ICE coffee inventories and have influenced American buyers to seek alternative sources, thereby affecting prices.
What Role Do Production Forecasts Play in Coffee Pricing?
Production forecasts from major coffee-producing nations, such as Brazil and Vietnam, provide insights into future supply levels. Higher production forecasts can lead to expectations of increased supply, potentially putting downward pressure on prices, while lower forecasts can signal tighter supplies and support higher prices.
Why are ICE Coffee Inventories Important?
ICE (Intercontinental Exchange) coffee inventories serve as a benchmark for the availability of coffee stocks. Declining inventories can indicate tightening supplies, which often leads to higher prices, whereas increasing inventories suggest ample supply and can potentially lower prices.
Final Thoughts on Coffee Market Trends
The coffee market is currently navigating a complex landscape shaped by weather-related concerns, shifting trade policies, and evolving production forecasts. Monitoring these key factors is essential for understanding potential price movements and making informed decisions.
As global coffee production and export trends continue to evolve, stakeholders in the coffee industry must stay informed and adapt to changing market dynamics. The interplay of these various influences will ultimately determine the trajectory of coffee prices in the months and years ahead.
