Tag: Commodity Prices

Coffee Prices Drop Sharply Amid Record Global Supply Projections

Posted on by Qahwa World

Dubai – Qahwa World

Coffee market prices ended Friday’s sessions with a significant decline, as March Arabica coffee contracts dropped by 3.84% to close at -11.85, while March Robusta coffee fell by 1.75% to close at -67. This downward trend persisted throughout the week, with Arabica hitting a 6-month low and Robusta reaching its lowest level in nearly 6 months, pressured by reports confirming robust global supplies.

The Brazilian crop forecasting agency, Conab, reported that coffee production in Brazil for 2026 is expected to rise by 17.2%, reaching a record 66.2 million bags. This includes a projected 23.2% surge in Arabica production to 44.1 million bags and a 6.3% increase in Robusta to 22.1 million bags. In Vietnam, the world’s leading Robusta producer, exports in January jumped by 38.3%, adding further bearish pressure on prices, especially after 2025 exports had already risen by 17.5% to 1.58 million metric tons.

Additionally, above-average rainfall in Brazil eased drought concerns. Minas Gerais, the largest Arabica-growing region, received 69.8 mm of rain in the week ending January 30, representing 117% of the historical average. Vietnam’s production for the 2025/2026 season is also projected to climb 6% to a 4-year high. Meanwhile, ICE-monitored inventories have begun to recover from previous lows; Arabica stocks rose from a nearly 2-year low to a 3-month high, and Robusta inventories showed a similar recovery.

Despite some supportive signals for prices, such as the Brazilian Trade Ministry reporting a 42.4% drop in January exports and the International Coffee Organization (ICO) noting a slight 0.3% dip in global shipments, the overall outlook remains focused on surplus. The USDA’s bi-annual report projects that world coffee production for 2025/2026 will increase by 2% to a record 178.8 million bags, with a significant 10.9% rise in Robusta output, even as total ending stocks are forecasted to decline by 5.4%.

Coffee Prices Retreat as Stronger Dollar Triggers Selling

Posted on by Qahwa World

Dubai – Qahwa World

Coffee futures ended lower on Thursday after surrendering earlier gains, pressured by a strengthening U.S. dollar that prompted investors to reduce long positions.

March arabica coffee futures declined about 0.8%, while March robusta futures slipped slightly, losing roughly 0.3% by the close.

The pullback came as the U.S. Dollar Index climbed to its highest level in four weeks, making dollar-denominated commodities like coffee less attractive to buyers. This currency move outweighed earlier support that had pushed arabica prices to a one-month high.

Earlier in the session, coffee prices found strength from weather concerns in Brazil. Rainfall in key growing areas remained below normal, particularly in Minas Gerais, the country’s largest arabica-producing region. Weekly precipitation there reached just under two-thirds of the historical average, renewing worries about crop development.

Robusta prices, however, continued to face headwinds from expanding supplies in Vietnam. The country reported a sharp increase in coffee exports for 2025, reflecting strong output from the world’s leading robusta producer.

Inventory trends offered mixed signals. Exchange-tracked arabica stocks, while still relatively low, have rebounded from recent multi-year lows. Robusta inventories also recovered modestly after hitting their weakest levels in over a year.

Trade flows have also influenced the market. Earlier U.S. tariffs reduced American purchases of Brazilian coffee during late summer and early autumn, sharply cutting imports during that period. Although tariffs have since been reduced, U.S. coffee supplies remain tight.

On the supply side, expectations of ample global production continue to weigh on prices. Brazil’s crop agency recently revised its 2025 coffee output forecast higher, while Vietnam is projected to harvest one of its largest crops in several years if favorable weather persists.

That said, some longer-term data point to tightening conditions. Global coffee exports edged lower in the current marketing year, according to international industry figures.

Looking ahead, the USDA projects world coffee production to reach a record level in the 2025/26 season, driven by strong growth in robusta output that offsets a decline in arabica production. Ending global stocks are expected to fall, suggesting that while near-term supply is ample, the balance could tighten further down the road.

Brazilian Real Firming Lifts Arabica Coffee as Market Signals Remain Mixed

Posted on by Qahwa World

Dubai – Qahwa World

March arabica coffee (KCH26) rose slightly by +0.15 (+0.04%) on Tuesday, while January ICE robusta (RMF26) slipped -15 (-0.34%), hitting a 1.5-week low. The day’s movements reflect a split market, with arabica gaining support from a stronger Brazilian real, now at a two-week high against the US dollar. The firmer currency is discouraging export sales from Brazil’s growers, helping arabica prices edge upward.

Robusta, however, is under pressure. The Vietnam Coffee and Cocoa Association reported that around 10% of the country’s robusta harvest is now complete and forecasted that expected drier weather will accelerate harvesting through the month. Vietnam is the world’s largest robusta producer, and signs of increased output continue to weigh on prices.

Weather conditions in Brazil are offering some support to the market. Somar Meteorologia noted that Minas Gerais—Brazil’s main arabica-producing region—received only 20.4 mm of rain in the week ending November 28, equivalent to 39% of the historical average.

Coffee inventories monitored by ICE continue to tighten. US tariffs on coffee imports from Brazil triggered a sharp drawdown in stocks. ICE-certified arabica inventories reached a 1.75-year low of 398,645 bags on November 20, while robusta inventories fell today to an 11-month low of 4,115 lots. American buyers have cancelled new Brazilian coffee contracts due to the tariffs, tightening domestic supply. US imports of Brazilian coffee from August to October fell 52% year-on-year to 983,970 bags.

On the policy side, the outlook for ample supply strengthened after the European Parliament approved a one-year delay to the European Union’s anti-deforestation law (EUDR). The postponement allows EU members to continue importing agricultural commodities—including coffee—from regions in Africa, Indonesia, and South America where deforestation remains a concern.

Several supply signals are weighing on the market. StoneX recently projected Brazil’s 2026/27 crop at 70.7 million bags, including 47.2 million bags of arabica, a 29% year-on-year increase. Vietnam’s supply outlook also remains heavy: its Jan–Oct exports rose 13.4% year-on-year to 1.31 MMT, and 2025/26 production is expected to grow by 6% to 1.76 MMT (29.4 million bags), a four-year high. Vicofa additionally suggested that Vietnam’s 2025/26 output could rise by 10% if favorable weather continues.

Some indicators continue to signal tightening global supply. The International Coffee Organization reported that global exports for the current Oct–Sep cycle slipped 0.3% year-on-year to 138.658 million bags. In Brazil, Conab cut its 2025 arabica estimate by 4.9% in September, lowering the projection to 35.2 million bags. Total Brazilian coffee output was trimmed to 55.2 million bags.

Longer-term forecasts from the USDA’s Foreign Agriculture Service expect global production to rise 2.5% in 2025/26 to a record 178.68 million bags. The outlook includes a 1.7% decline in arabica output to 97.022 million bags, alongside a 7.9% increase in robusta to 81.658 million bags. Ending stocks are projected to rise 4.9% to 22.819 million bags.

Coffee Prices Settle Lower Despite Inventory Tightness

Posted on by Qahwa World

Dubai – Qahwa World

Coffee futures closed lower on Wednesday, primarily due to an improved global supply outlook after a key European regulation was delayed. March arabica coffee (KCH26) settled down -3.60 (-0.94%), and January ICE robusta coffee (RMF26) closed down -46 (-1.01%).

The principal downward pressure on coffee prices stemmed from the European Parliament’s approval of a one-year delay to the Deforestation Regulation (EUDR). This regulation, which aims to combat deforestation in countries exporting key commodities like coffee to the EU, will now allow EU countries to continue importing agricultural products from regions in Africa, Indonesia, and South America where deforestation may be occurring. This delay ensures a more ample and continuous flow of global coffee supplies into the European market.

Further reinforcing the bearish outlook are strong production forecasts. StoneX predicted last Wednesday that Brazil’s coffee production for the new 2026/27 marketing year will hit 70.7 million bags, representing a significant year-over-year increase of +29%. Arabica production is specifically forecasted at 47.2 million bags. Signs of increasing robusta supplies are also evident in Vietnam. The country’s Jan-Oct 2025 coffee exports rose +13.4% year-over-year to 1.31 MMT. Furthermore, the 2025/26 coffee production is projected to climb +6% y/y to a four-year high of 29.4 million bags (1.76 MMT), a forecast supported by the Vietnam Coffee and Cocoa Association (Vicofa).

Despite the overall downward movement, losses were limited by several supportive factors, including adverse weather and tightening inventories. Arabica prices found support due to dryness in Brazil’s largest arabica-growing region, Minas Gerais, which received only 49% of its historical average rainfall in the week ended November 21. Robusta prices were also supported by forecasts of heavy showers in Vietnam’s Dak Lak province, which is expected to further delay the harvest in the world’s largest robusta producer.

Shrinking ICE coffee inventories have also been supportive of prices. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags last Thursday, and robusta inventories hit a 6.25-month low on Wednesday. This drawdown has been largely attributed to the previous US tariffs imposed on coffee imports from Brazil, which caused US buyers to void new contracts and tightened US supplies. However, arabica coffee experienced a sharp tumble last Friday after President Trump signed an executive order late Thursday that exempted Brazilian food products, including coffee, from those tariffs, potentially easing supply concerns moving forward.

Finally, there are mixed signals from global supply data. The International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (Oct-Sep) fell slightly by 0.3% y/y to 138.658 million bags, suggesting tighter global supplies recently. The USDA’s Foreign Agriculture Service (FAS) projects world coffee production in 2025/26 to increase by +2.5% y/y to a record 178.68 million bags, but forecasts a -1.7% decrease in arabica production, offering mixed signals.

In summary, the near-term supply outlook, bolstered by the EU regulation delay and massive Brazilian crop forecasts, outweighed the temporary support from weather issues and shrinking inventories, pushing coffee prices lower for the day.