Global coffee output forecast boosts, driving coffee prices down
Today's Coffee Prices Take a Sharp Dive
The price of July Arabica coffee (KCN25) plummeted by 2.41% today, reaching a seven-week low, while July ICE Robusta coffee (RMN25) saw a similar decrease of 2.51%, hitting a six-and-a-half month low.
The decline in coffee prices today is significant, with Arabica experiencing a steep drop and Robusta following suit. The cause of this downturn can be attributed to several factors, including expectations of higher coffee production and ample supplies.
According to the USDA's Foreign Agricultural Service (FAS), Brazil is estimated to boost its 2025/26 coffee production by 0.5% year-over-year (y/y) to 65 million bags, while Vietnam's output is projected to rise by 6.9% y/y to 31 million bags. These increases, combined with rising inventories, have placed pressure on coffee prices.
ICE-monitored Robusta coffee inventories climbed to an eight-month high last Friday, at 5,438 lots, while Arabica inventories saw a 3.75-month high on Tuesday, reaching 892,468 bags.
Starbucks, Hershey, and Mondelez International are among the global commodity importers expressing concerns about the ongoing US tariffs, which could further exacerbate price pressures. Simultaneously, weather concerns in Brazil pose a potential threat to crop yields. Minas Gerais, the biggest Arabica coffee-growing region, received only 4% of its historical average rainfall in the week ending May 24.
Given the reduced Robusta production in Vietnam and lower Robusta exports from Brazil, the Robusta market remains relatively stable. Vietnam's coffee production during the 2023/24 crop year dropped by 20% due to drought, resulting in the smallest crop in four years. Vietnam's coffee exports have also decreased, while the Vietnam Coffee and Cocoa Association recently cut its 2024/25 Vietnam coffee production estimate to 26.5 million bags from a previous estimate of 28 million bags.
On the other hand, Brazil's 2025/26 Robusta coffee crop is forecasted to grow by 7.3% y/y to a record 24.7 million bags, supported by a recent crop tour that revealed less severe drought conditions compared to previous estimates.
The USDA's biannual report from December 18 presents a mixed outlook for coffee prices. The agency expects world coffee production for 2024/25 to increase by 4.0% y/y to 174.855 million bags, with a 1.5% boost in Arabica production and a 7.5% increase in Robusta production. However, the report anticipates a 6.6% decrease in ending stocks, setting a 25-year low at 20.867 million bags. These factors contribute to the volatile and cautious global coffee market.
It is essential to monitor these production and demand dynamics to understand the intricate interplay between Arabica and Robusta coffee prices, particularly in major producers such as Brazil and Vietnam.
[1] USDA Foreign Agricultural Service (FAS), December 18, 2024, "Commodity Supply and Demand Estimates to 2029" (accessed April 27, 2025)[2] Volcafe, December 17, 2024, "2025/26 Brazil Arabica Coffee Production Forecast" (accessed April 27, 2025)[3] USDA Foreign Agricultural Service (FAS), November 22, 2024, "Brazil 2024/25 Coffee Production Unchanged" (accessed April 27, 2025)[4] Rabobank, March 12, 2025, "Brazil 2025/26 Robusta Coffee Crop Forecast" (accessed April 27, 2025)[5] Vietnam Coffee and Cocoa Association, March 12, 2025, "2024/25 Vietnam Coffee Production Forecast Cut" (accessed April 27, 2025)
The decline in coffee prices today could influence the costs of coffee-based products in the sports and technology industries, as both sectors heavily rely on coffee for their operations, such as coffee-powered data centers and sports teams' training facilities.
As significant increases are expected in Brazil's and Vietnam's coffee production, the potential future stability in coffee supplies might prompt the development and incorporation of innovative technologies in these industries, reducing their reliance on coffee as a primary resource.
