Tag: Market news

Brazil Rain and Vietnam Surplus Sink Coffee Futures

Posted on by Qahwa World

NEW YORK — Qahwa World

Coffee futures saw a sharp downturn on Friday, with Arabica hitting a five-and-a-half-month low and Robusta dropping to a three-and-a-half-week trough. March Arabica (KCH26) finished the session down 13.25 cents (-3.845%), while March ICE Robusta (RMH26) fell by $66 (-1.58%).

The primary pressure stems from the weather outlook in South America. Forecasts now indicate consistent rainfall across Minas Gerais, Brazil’s premier growing region, for the upcoming week. This shift toward a more favorable moisture profile has dampened the recent rally.

Further bearish sentiment is driven by a bolstered supply outlook. On December 4, Brazil’s Conab increased its 2025 production forecast by 2.4%, now estimating a total of 56.54 million bags. Simultaneously, Vietnam—the world’s top Robusta producer—continues to flood the market. Vietnam’s National Statistics Office noted a 17.5% year-over-year surge in 2025 exports, totaling 1.58 million metric tons. Production for the 2025/26 cycle is expected to climb 6% to a four-year high of 29.4 million bags, with Vicofa suggesting output could rise by 10% if conditions remain optimal.

Market inventories are also seeing a notable recovery. ICE-monitored Arabica stocks rebounded from a nearly two-year low in November to reach 461,829 bags as of mid-January. Robusta stocks followed a similar path, recovering from a one-year low in December to reach a nearly two-month high of 4,609 lots this past Friday.

However, some factors continue to provide an underlying floor for prices. Cecafe reported a sharp 18.4% drop in Brazilian green coffee exports for December, with Robusta shipments specifically tanking by 61%. Furthermore, recent data from Somar Meteorologia highlighted that rainfall in Minas Gerais was recently only 53% of the historical average, while the ICO reported a slight 0.3% dip in global exports for the current marketing year.

Looking ahead, the USDA Foreign Agriculture Service (FAS) projects record global production of 178.848 million bags for 2025/26. While the agency expects a 4.7% dip in Arabica output, a projected 10.9% jump in Robusta production is set to offset those losses. Despite the record harvest, FAS anticipates ending stocks will tighten by 5.4% to roughly 20.15 million bags.

Global Coffee Prices Jump Amid Supply Concerns

Posted on by Qahwa World

Dubai – Qahwa World

Prices for coffee futures saw a sharp increase today, driven by worries over how weather conditions might impact harvests in major producing nations, alongside notable drops in monitored exchange inventories.

Prices for both arabica and robusta coffee are significantly higher as adverse weather bolsters concerns over global coffee crops. Arabica coffee has found support due to dryness concerns in Brazil. Specifically, meteorology reports indicated that Brazil’s largest arabica coffee-growing area, Minas Gerais, received 49% of its historical average rainfall during the week ended November 21st, fueling concerns about the current crop. Robusta coffee is climbing today on forecasts of heavy showers in Vietnam’s Dak Lak province, the country’s biggest coffee-growing region. These heavy rains are expected to further delay the harvest, tightening short-term supply expectations.

Shrinking inventories monitored by the Intercontinental Exchange (ICE) are also supportive of prices. US trade actions concerning Brazilian coffee imports have reportedly caused a substantial reduction in US exchange stockpiles. ICE-monitored arabica stocks fell to a 1.75-year low last week, and ICE robusta inventories hit a 4.5-month low today. American buyers avoided new contracts for Brazilian coffee purchases due to the tariffs, thereby tightening US supplies, as about a third of America’s unroasted coffee comes from Brazil. US purchases of Brazilian coffee during the period when tariffs were effective dropped by 52% from the same period last year.

Last Friday, arabica coffee had briefly tumbled to a seven-week low after an executive order was signed late last week, exempting Brazilian food products, including coffee, from the 40% tariff. In a potentially bearish factor, one major commodity consultancy forecast that Brazil will produce 70.7 million bags of coffee in the new 2026/27 marketing year, including 47.2 million bags of arabica, a significant year-over-year increase. Increased Vietnamese coffee supplies are also bearish for prices. Recent statistics show Vietnam’s coffee exports rose by 13.4% year-over-year in the January-October period. Additionally, Vietnam’s 2025/26 coffee production is projected to climb 6% year-over-year to a four-year high of 29.4 million bags, with the Vietnam Coffee and Cocoa Association suggesting a 10% increase if weather remains favorable. Vietnam is the world’s largest producer of robusta coffee.

Signs of tighter global coffee supplies are generally supportive of prices. The International Coffee Organization (ICO) reported that global coffee exports for the current marketing year (October-September) fell 0.3% year-over-year. Coffee prices also found support after Conab, Brazil’s crop forecasting agency, cut its Brazil 2025 arabica coffee crop estimate by 4.9% in September, and slightly reduced its total Brazil 2025 coffee production estimate. The USDA’s Foreign Agriculture Service (FAS) previously projected that world coffee production in 2025/26 will increase by 2.5% to a record high, driven by a 7.9% increase in robusta production, offsetting a slight decrease in arabica output. FAS forecasted modest production increases for both Brazil and Vietnam in 2025/26, along with a climb in global ending stocks.