Dubai, 23 August, 2025 (Qahwa World) – Coffee futures surged sharply on Friday, reaching multi-month highs as weather concerns in Brazil and tightening global supplies continued to fuel bullish momentum. December arabica coffee (KCZ25) closed up +13.30 cents (+3.64%), marking a 3.5-month high, while September ICE robusta (RMU25) gained +108 points (+2.27%), its strongest level in three months. The rally extended a three-week upward trend, with traders reacting to reports of dry conditions and frost damage in Brazil, the world’s largest coffee producer.
According to Somar Meteorologia, Minas Gerais, Brazil’s leading arabica coffee-growing region, recorded no rainfall during the week ending August 16. This lack of precipitation, coupled with recent frost damage, raised concerns over crop yields and pushed prices higher. Additional upward pressure came from the United States, where coffee supplies are tightening as buyers void new Brazilian contracts in response to a 50% tariff on Brazilian exports. With nearly one-third of U.S. coffee imports traditionally sourced from Brazil, the restrictions have intensified market concerns over availability.
Brazil’s Trade Ministry reported that July unroasted coffee exports fell by 20.4% year-on-year to 161,000 metric tons. Exporter group Cecafe confirmed an even steeper decline in green coffee shipments, which dropped 28% in July to 2.4 million bags. Arabica exports fell 21%, robusta plunged 49%, and overall shipments for the January–July period slipped 21% to 22.2 million bags. Meanwhile, ICE-monitored arabica inventories fell to a 1.25-year low of 726,661 bags before recovering slightly to 729,606 bags on Friday. Robusta inventories also dropped to a four-week low of 6,642 lots, down from a two-year high of 7,029 lots at the end of July.
On the other hand, progress in Brazil’s harvest is adding a bearish element. Safras & Mercado reported that 99% of the 2025/26 crop was harvested as of August 20, with the robusta harvest completed and 98% of arabica finished. Brazil’s largest cooperative, Cooxupé, announced that its members had completed 86.1% of their harvest by August 15.
Global developments continue to influence sentiment. The International Coffee Organization reported that world coffee exports rose 7.3% in June to 11.69 million bags, although cumulative shipments from October through June were slightly lower at 104.14 million bags. In Vietnam, drought reduced 2023/24 production by 20% to 1.472 million metric tons, the smallest crop in four years, while 2024 exports dropped 17.1%. The Vietnam Coffee and Cocoa Association has since lowered its 2024/25 production forecast to 26.5 million bags. However, government data showed that exports from January to July 2025 rose 6.9% to 1.05 million metric tons.
The USDA’s Foreign Agriculture Service projects that global coffee production in 2025/26 will rise by 2.5% to a record 178.68 million bags, with robusta output increasing by 7.9% to 81.66 million bags and arabica output slipping 1.7% to 97.02 million bags. Ending stocks are forecast to climb 4.9% to 22.82 million bags. Despite these figures, trader Volcafe projects a widening arabica deficit of 8.5 million bags for 2025/26, compared with 5.5 million in 2024/25, marking the fifth consecutive year of shortages.
Coffee markets are now navigating the opposing forces of immediate weather-driven supply risks and harvest progress in Brazil against longer-term forecasts of record global output, leaving traders alert to further volatility in the weeks ahead.
