Tag: arabica futures

Coffee Market Weekly: Arabica Futures Fall as Macro Volatility and Origin Risks Intensify

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Dubai – Qahwa World

Coffee markets ended the week under renewed pressure, with Arabica futures retreating sharply after multiple failed attempts to break above key technical resistance levels. Broader macroeconomic volatility, shifting geopolitical sentiment, and emerging supply risks from origin countries combined to shape a turbulent trading environment across both Arabica and Robusta markets.

Arabica Futures: Failure Above 300 Triggers Selloff

The July 2026 Arabica contract (KCN26), which remained the most active benchmark during the reporting period, opened the week on a volatile but broadly stable footing. Early trading on Monday saw prices rally from an opening level of 294.60 cents per pound, briefly pushing above the psychologically significant 300 cents per pound threshold. However, the move quickly lost momentum, with the market failing to establish sustained trading above this level.

By Tuesday, modest gains of 1.35 cents per pound were recorded, supported by tightening short-term supply conditions. Market sentiment was further underpinned by export data from Cecafe, which indicated a 10 percent year-on-year decline in Brazilian coffee exports for March 2026, reinforcing concerns over near-term availability.

Wednesday marked the third consecutive session in which the market attempted and failed to sustain levels above 300 cents per pound. The inability to hold above this technical resistance level contributed to a gradual deterioration in sentiment, although the market still closed marginally higher on the day.

The tone shifted decisively on Thursday. Following a strengthening US dollar and a lack of buying interest above the 300 level, Arabica futures broke sharply lower, falling below 290 cents per pound within the first two hours of trading. The market reached an intraday low of 287.10 cents per pound before recovering slightly into the close.

However, selling pressure persisted into Friday, with no meaningful rebound in sentiment. The week concluded with Arabica futures settling at 284.25 cents per pound, marking a clear downside move and a rejection of recent resistance levels.

Currency Markets: Geopolitics Drive Volatility in FX

Foreign exchange markets were heavily influenced by developments surrounding US–Iran relations, with shifting geopolitical signals driving volatility across major currency pairs.

At the start of the week, both GBP/USD and EUR/USD weakened following the breakdown of US–Iran negotiations over the weekend. Sterling opened at 1.34, while the euro began at 1.16, reflecting a broad-based strengthening of the US dollar amid heightened geopolitical uncertainty.

Midweek sentiment improved after reports emerged suggesting that diplomatic discussions between the United States and Iran had resumed. This development supported a recovery in risk appetite, pushing GBP/USD above 1.35 and EUR/USD above 1.18. During this period, the US Dollar Index (DXY) eased to just above 98, reflecting a temporary shift away from safe-haven assets.

However, sentiment reversed again towards the end of the week. Markets reacted to the announcement that the Strait of Hormuz had been fully reopened to commercial shipping for the duration of the ceasefire. The news reduced concerns over supply disruption risks and encouraged a renewed rotation into risk assets.

As a result, the US dollar weakened further, with the DXY falling back below 98, approaching a seven-week low. Currency markets remained sensitive to ongoing geopolitical developments, with volatility expected to persist.

Origin Markets: Climate and Supply Risks Build

Colombia: Weather Disruption Reduces Output Expectations

In Colombia, coffee production is expected to decline compared with both 2024 and 2025 levels. Persistent and excessive rainfall has disrupted key stages of crop development, including flowering, cherry maturation, and bean formation.

Southern growing regions have been particularly affected, with reduced sunlight hours compounding the impact of heavy rainfall. While a natural production correction was anticipated following a strong prior year, current climatic conditions are increasingly viewed as a key downside risk to output.

Vietnam and Indonesia: El Niño Risk Intensifies

In Vietnam and parts of Indonesia, market attention is increasingly focused on the potential development of a stronger El Niño event during the current cycle.

According to the US National Oceanic and Atmospheric Administration (NOAA), there is a 25 percent probability that the ENSO positive phase could reach “super” intensity. Such an event is defined by central-equatorial Pacific sea surface temperatures at least two degrees Celsius above average.

Historically, only three super El Niño events have been recorded in the past 40 years, with the most recent occurring in 2015–2016.

For key coffee-producing regions such as Vietnam and Indonesia, El Niño conditions typically bring drier weather patterns. A stronger event could result in prolonged drought, elevated temperatures, and water stress, all of which would materially impact coffee production.

Vietnam, as the world’s largest producer of Robusta coffee, is particularly exposed to these risks. Any significant reduction in output would likely tighten global supply conditions and could provide upward support to LIFFE Robusta futures.

Conclusion

The coffee market enters the new reporting period with a softer technical outlook for Arabica, heightened sensitivity to macroeconomic and geopolitical developments, and increasing attention on weather-related supply risks across key origin regions. While short-term price action remains driven by dollar strength and risk sentiment, medium-term fundamentals continue to be shaped by production uncertainty in South America and Asia.

 

Coffee Prices Sink as Brazil Rainfall Outlook Improves

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Dubai – Qahwa World

Coffee futures faced a sharp retreat on Friday, with Arabica falling -13.25 (-3.85%) to a five-and-a-half-month low, and Robusta sliding -66 (-1.58%) to a three-and-a-half-week low. The primary downward pressure stems from weather forecasts predicting steady, beneficial rains over the next week in Minas Gerais, Brazil’s premier coffee-growing region.

The bearish sentiment is further reinforced by an ample supply outlook. Brazil’s crop agency, Conab, recently raised its 2025 production estimate to 56.54 million bags, a 2.4% increase from previous forecasts. Simultaneously, Vietnam—the world’s top Robusta producer—reported a 17.5% year-over-year surge in 2025 exports, reaching 1.58 MMT. Vietnam’s 2025/26 output is projected to climb another 6% to a four-year high, potentially reaching 10% growth if favorable weather holds.

Inventory recoveries at the Intercontinental Exchange (ICE) have added to the price pressure. Arabica inventories rose to a two-and-a-half-month high of 461,829 bags in mid-January, while Robusta inventories hit a seven-week high of 4,609 lots last Friday.

However, some factors continue to provide underlying support. Cecafe reported that Brazil’s December green coffee exports dropped 18.4% to 2.86 million bags, with Robusta exports specifically plummeting 61%. Additionally, while rains are forecasted, recent data shows that Minas Gerais received only 53% of its historical average rainfall in mid-January.

Looking ahead, the USDA’s Foreign Agriculture Service projects record global production of 178.848 million bags for 2025/26. While Arabica production may see a 4.7% dip, a significant 10.9% increase in Robusta output is expected to drive global totals to new heights, even as global ending stocks are forecasted to tighten slightly.

Arabica Rebounds: Brazil Drought Fears Drive Price Surge Despite Tariff Removal Pressure

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Arabica coffee futures experienced a strong rally today, Monday, fueled by renewed concerns over Brazil’s current crop conditions. This upward movement reflects the market’s conflicting forces, which are still reacting to the executive order on tariff removal issued late last week.

March Arabica coffee futures (KCH26) surged by $7.40 (+2.00%) today, following a report highlighting alarming dry conditions in Brazil. Somar Meteorologia reported that Minas Gerais, the country’s largest Arabica-growing state, received only 26.4 mm of rain in the week ended November 21, amounting to just 49% of the historical average. This significant rainfall deficit raises concerns about the health and development of the current crop, providing strong support for the market price.

Further bolstering the price are shrinking stockpiles. ICE-monitored Arabica inventories have fallen to a 1.75-year low of 398,645 bags. This inventory drawdown is a direct consequence of previously imposed US tariffs on Brazilian coffee imports, which led American buyers to void new contracts, severely tightening US supplies, as Brazil typically supplies about a third of America’s unroasted coffee.

Despite today’s rally, prices remain near the 7-week low recorded in the previous session. That sharp decline was triggered by the US President signing an executive order late last Thursday, exempting Brazilian agricultural products, including green coffee, from the existing 40% tariffs. This tariff removal, which does not cover instant coffee, created immediate downward pressure as traders anticipated a greater influx of Brazilian supply into the US market.

Longer-term expectations for Brazil’s next crop continue to act as a bearish factor. StoneX analysts last week forecast that Brazil will produce 70.7 million bags of coffee in the 2026/27 season, including 47.2 million bags of Arabica, representing a projected 29% year-on-year increase. Furthermore, Climatempo forecasts suggest heavy rainfall will continue in growing regions this week, providing favorable growth conditions for the subsequent crop.

In the Robusta market, January futures (RMF26) edged lower by 12 points (-0.27%), pressured by forecasts for drier weather in Vietnam. Improved dry conditions are expected to allow the resumption of the Robusta harvest in key provinces like Dak Lak, easing supply delay concerns in Vietnam, the world’s largest Robusta producer. Official data previously showed that Vietnam’s coffee exports for January through October 2025 rose 13.4% year-on-year.

US Roasters Tear Through Coffee Stocks Waiting for Brazil Trade Deal

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New York – Qahwa World

Coffee roasters in the United States are depleting their stockpiles while waiting for the outcome of ongoing U.S.–Brazil trade negotiations — talks that could determine whether they must continue paying higher prices for alternative coffee sources.

Brazil, which supplies about one-third of the beans consumed by the world’s largest coffee market, has been effectively priced out of the U.S. since August, when President Donald Trump’s administration imposed a 50% import tariff on Brazilian coffee — a move widely viewed as politically motivated.

The tariff was seen as retaliation against Brazil’s left-wing President Luiz Inacio Lula da Silva, following tensions with the U.S. over his predecessor Jair Bolsonaro. The measure has disrupted the $340-billion U.S. coffee industry, leaving importers with stranded shipments, roasters cancelling deliveries, and consumers paying up to 40% more for coffee.

Industry estimates suggest U.S. coffee stockpiles will reach minimal levels by December. Some importers were forced to pay the 50% duty on cargoes booked before the tariff, while others redirected shipments to avoid it.

Steven Walter Thomas, owner of U.S. importer Lucatelli Coffee, said the tariff is “punitive, political, and personal — between Trump and Lula.” His company stored $720,000 worth of Brazilian coffee in a bonded warehouse in Florida to delay import taxes, while diverting some shipments to Canada to avoid the tariff, despite higher transport costs.

The cost surge has also squeezed major players such as Starbucks, whose CEO Cathy Smith said high coffee prices will remain a “headwind” through at least mid-2026.

Smaller roasters are feeling the pressure too. Downeast Coffee Roasters in Rhode Island said it managed to cancel some Brazilian orders but still faces rising costs for alternatives. Cancellation fees reached $20–$25 per 60-kg bag, on cargoes worth about $250,000 per container.

With Brazil largely off the U.S. market, prices for substitutes from Colombia, Mexico, and Central America have risen around 10%, while Brazilian prices have fallen about 5%.

Retail coffee prices in the U.S. climbed 41% year-on-year in September, reaching an average of $9.14 per pound, according to the Bureau of Labor Statistics — a key driver of food inflation. Tight supply and record-high Arabica futures on the ICE exchange continue to fuel the trend.

“I’m not looking too much into brands anymore — I’m going for the deals,” said Sherryl Legyin, a cashier from New Jersey.
“It used to be $6 or $7, now it’s $11,” added travel agent Yasmin Vazquez.

Traders estimate U.S. stocks at about 4 million 60-kg bags, likely to drop to 2.5–3 million by December — close to minimum operational levels. The U.S. typically consumes 25 million bags per year, with 8 million coming from Brazil.

President Lula said he remains optimistic that a trade deal with Washington could come “faster than anyone thinks.”
Trump responded cautiously: “I don’t know if anything’s going to happen, but we’ll see.”

Until then, the price of an American cup of coffee is expected to stay high.

Bad News for Coffee Drinkers: U.S. Tariffs Push Prices to Record Highs

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Dubai – Qahwa World

Times are getting tougher for coffee drinkers as tariffs push already record-high prices even higher.

When former U.S. President Donald Trump announced new tariffs on imports in April, many in the industry believed coffee would be spared since the U.S. barely produces it domestically. But by midyear, a 10% duty was imposed on most imported coffee, including shipments from Brazil—the world’s top supplier. In August, those tariffs on Brazil rose sharply to 50%.

For roasters like Chad Seegers of Low Country Coffee Roasters in Charleston, South Carolina, the impact has been immediate. “Raw-bean prices have doubled for us,” he said. Wholesale prices to his customers have risen by 30–40%, while retail prices climbed by about 25%. “Brazilian coffee, which made up 80% of our best-selling blend, is simply not feasible anymore.”

The industry was already struggling before tariffs. According to Fernando Maximiliano of StoneX, global coffee output has been hit repeatedly by droughts, frosts, and extreme weather since 2020, leaving global inventories at just 36–37 million bags in 2024, down from nearly 59 million in 2020. “Persistent supply shocks had already fueled inflation in coffee markets. Tariffs only intensified the strain,” Maximiliano explained.

The data shows the severity: U.S. city prices for 100% ground roast coffee hit $8.87 per pound in August 2025—the highest on record since tracking began in 1980. Futures markets reflect the pressure too. Arabica “C” contracts in New York have surged nearly 20% this year, peaking at $4.29 a pound in February.

Trade flows are already adjusting. ING’s food and agriculture economist Thijs Geijer noted that U.S. imports of Brazilian coffee plunged more than 75% in August compared with a year earlier, while exports from Colombia and Vietnam have remained stable. American buyers are now sourcing from alternative markets with lower tariffs.

Still, the adjustment is costly. Seegers said some family growers from Cameroon and Costa Rica refused to sell to the U.S. altogether rather than deal with tariff rules. Profit margins for his roastery have been cut in half, and he warned: “A $4.50 latte is now $7 in some cafés.”

According to Geijer, much of the tariff-driven cost increase has not yet reached store shelves. With the 50% tariff on Brazilian coffee only taking effect in August, existing inventories are still being used. “Expect the tariff impact to start hitting retailers in the fourth quarter,” he warned.

Starbucks, the world’s largest coffee chain, confirmed in its July earnings call that its hedging strategies delay cost spikes, but said year-over-year increases are expected to peak in the first half of fiscal 2026.

Despite the financial hit, Seegers said his company refuses to compromise on quality: “We chose to absorb most of the cost increases rather than cut corners.” But the stress is mounting. Higher prices are slowing demand, squeezing both roasters and cafés.

With U.S. coffee lovers already paying more than ever before, the worst may still be ahead. “High-tariff coffee hasn’t even fully hit the shelves yet,” Geijer warned. For millions of Americans, their daily cup may soon cost more than they ever imagined.

Coffee Prices Surpass $4 per Pound Amid Global Supply Strains and Trade Tensions

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Dubai, September 16, 2025 (Qahwa World) – The global coffee market has once again taken center stage as New York arabica futures surged above $4 per pound for the first time since April. This sharp rally reflects a confluence of factors—from severe drought in Brazil and dwindling inventories to U.S. import tariffs and weaker global exports—raising new concerns about supply stability.

A Sharp Rally in Prices

On Monday, arabica futures jumped 3.6%, bringing total gains since early August to nearly 47%. In New York, arabica rose 3.1% to $4.0905 per pound, while robusta in London climbed 3.6%. The steep rise has fueled market anxiety, with momentum indicators signaling overbought conditions: the 14-day relative strength index crossed above 70, pointing to unusually rapid gains.

Brazil at the Epicenter

Brazil, the world’s top coffee producer, remains at the heart of the current price surge. According to meteorological firm Somar Meteorologia, the key producing states of Minas Gerais and São Paulo face abnormal heat and drought, while Espírito Santo is also expected to receive below-average rainfall. Such conditions threaten the upcoming flowering stage—a critical period for setting the next harvest due in mid-2026.

Brazil’s crop forecasting agency Conab lowered its 2025 arabica output estimate by 4.9% on September 4, cutting projections to 35.2 million bags from 37 million in May. Overall coffee production was revised to 55.2 million bags from 55.7 million previously.

Currency movements are amplifying the pressure: the Brazilian real rallied to a 15-month high against the U.S. dollar, discouraging export sales and lending further bullish support to global coffee prices.

U.S. Tariffs Tighten Supply

Trade tensions are another driving force. The U.S. imposed a 50% tariff on Brazilian coffee imports, prompting American buyers to cancel new contracts. This shift is tightening domestic supplies, particularly significant given that nearly one-third of U.S. unroasted coffee imports come from Brazil. Analysts warn this could amplify short-term volatility.

Shrinking Inventories

The decline in exchange-monitored stockpiles underscores the strain on global supply. ICE-monitored arabica inventories fell Monday to a 16-month low of 666,337 bags. Robusta inventories also slipped to a two-week low of 6,556 lots, hovering just above the seven-week low reached in late August.

Reduced reserves highlight how vulnerable the market is to further disruptions, with less buffer available to absorb shocks.

Export Slowdowns Worldwide

Export data confirms these tightening conditions. The International Coffee Organization (ICO) reported on September 3 that global exports fell 1.6% year-on-year in July to 11.6 million bags. Cumulative shipments from October through July declined 0.3% to 115.6 million bags.

Brazilian exports have been particularly weak. The Trade Ministry reported a 20.4% year-on-year drop in July shipments of unroasted coffee to 161,000 metric tons. Exporter group Cecafe said July green coffee exports fell 28% to 2.4 million bags, with arabica shipments down 21% and robusta plunging 49%. Overall, Brazil’s exports in July totaled 2.7 million bags, while January–July shipments fell 21% to 22.2 million bags.

Vietnam Adds to the Strain

Vietnam, the world’s second-largest producer, is also struggling. Production in the 2023/24 crop year fell 20% to 1.47 million metric tons, the smallest crop in four years, while exports for 2024 dropped 17.1% to 1.35 million tons. The Vietnam Coffee and Cocoa Association in March lowered its 2024/25 production estimate to 26.5 million bags from 28 million.

Yet more recent figures show some rebound: Vietnam’s National Statistics Office reported January–August 2025 exports up 7.8% year-on-year to 1.14 million tons, highlighting mixed signals from the world’s robusta powerhouse.

Mixed Forecasts and Outlook

The outlook remains divided. The USDA’s Foreign Agriculture Service (FAS) projects global coffee production in 2025/26 will rise 2.5% year-on-year to a record 178.7 million bags. Arabica production is forecast to fall 1.7% to 97 million bags, while robusta is expected to jump nearly 8% to 81.7 million bags. Ending stocks are seen climbing 4.9% to 22.8 million bags.

By contrast, commodity trader Volcafe projects a global arabica deficit of 8.5 million bags in 2025/26, widening from a 5.5 million bag shortfall this season. This would mark the fifth consecutive year of supply deficits for arabica, underscoring persistent structural imbalances.

Harvest Progress in Brazil

One counterweight to bullish factors is Brazil’s rapid harvest progress, which typically exerts downward pressure on prices. On September 5, cooperative Cooxupé reported that its members had harvested 97% of their crops. Separately, Safras & Mercado said Brazil’s 2025/26 harvest was 99% complete as of August 20, compared with 98% at the same time last year. Robusta harvesting was complete, and arabica was 98% finished.

Still, despite the near-completion of the harvest, broader supply-side issues—including weather stress and declining exports—continue to outweigh the potential bearish impact of fresh beans entering the market.

The Bigger Picture

The coffee market now finds itself caught between conflicting forces. On one side are bullish drivers: drought in Brazil, U.S. tariffs, shrinking inventories, weaker exports, and long-term arabica deficits. On the other side are bearish signals, including harvest completion and USDA’s optimistic production outlook.

For now, the bullish momentum dominates. The symbolic $4-per-pound threshold has been breached, highlighting the fragility of coffee supply chains. With climate uncertainty, trade disputes, and tightening stockpiles all in play, volatility looks set to remain a defining feature of the global coffee market in the months ahead.

Global Coffee Prices Surge as Brazil Faces Weather Woes and US Tariffs

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São Paulo, August 25, 2025 (Qahwa World) – Coffee markets remain under heavy pressure from climate shocks in Brazil and trade tensions with the United States, pushing prices sharply higher in recent weeks, even as a stronger U.S. dollar triggered modest profit-taking on Monday.

Arabica futures in New York had surged to a 3.5-month high earlier in the day but ended lower, with December contracts closing down 0.15% after investors booked profits. September robusta contracts were idle due to a UK holiday. Analysts said the dollar’s strength spurred liquidation, though underlying supply concerns continue to dominate the market.

In Brazil, retail coffee prices that had fallen an average of 12% earlier in August are now expected to reverse course. According to the Brazilian Coffee Industry Association (ABIC), raw coffee prices rose almost 25% between July and August, reaching 2,191 reais ($395) per 60-kilogram bag. Despite this surge, supermarket prices in August averaged 58.99 reais (around $10) per kilogram, still below May’s peak of 70 reais/kg. ABIC’s executive director, Celirio Inacio, warned that if futures remain elevated, higher shelf prices are “inevitable.”

The main external factor driving the rally remains the 50% tariff imposed by the U.S. government on Brazilian goods, including coffee. Brazil normally supplies about one-third of U.S. unroasted coffee imports, and American buyers have already begun canceling contracts. Marcio Ferreira, president of Brazil’s Coffee Exporters Council (Cecafé), called the tariffs “the main driver” of the sharp price increases in New York.

Weather concerns add another layer of pressure. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica-producing state, received no rainfall in the week ending August 23. Frost damage earlier in the month has also raised fears of reduced yields. Despite this, Brazil’s 2025/26 harvest is almost complete: Safras & Mercado estimated 99% of the crop had been gathered by August 20, with robusta fully harvested and arabica at 98%. Cooxupé, the country’s largest cooperative, reported its members’ harvest at 86.1% by mid-August.

Exports are slowing dramatically. Brazil’s July shipments of unroasted coffee dropped 20.4% year-on-year to 161,000 metric tons, while Cecafé data showed green coffee exports fell 28% to 2.4 million bags. Arabica exports fell 21%, robusta plunged 49%, and total shipments from January through July were down 21% from last year at 22.2 million bags. Meanwhile, inventories tracked by ICE remain at multi-year lows: arabica stocks hit a 15-month low of 726,661 bags in mid-August, while robusta fell to its lowest in four weeks.

Global dynamics reflect the same strain. The USDA’s Foreign Agriculture Service (FAS) projects world coffee production in 2025/26 will rise 2.5% year-on-year to a record 178.7 million bags, with robusta up nearly 8% but arabica slightly down. Brazil’s production is forecast to rise only 0.5% to 65 million bags, while Vietnam could rebound 6.9% to 31 million bags, its largest in four years. Yet despite the higher output, trading house Volcafe predicts an arabica deficit of 8.5 million bags for 2025/26 — the fifth consecutive year of shortfalls.

Brazil, as the world’s top coffee producer and exporter and the second-largest consumer after the United States, stands at the center of these global shifts. With tariffs restricting trade, exports slowing, inventories tightening, and weather threats mounting, analysts warn that consumers should brace for rising retail coffee prices both domestically and worldwide — even if day-to-day trading sometimes pulls prices lower.