Tag: supply chain

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.

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.

US rolls back extra duties on Brazilian coffee imports

Posted on by Qahwa World

Dubai – Qahwa World

The administration in Washington has moved to ease trade pressure on Brazil by withdrawing an additional 40% duty that had been placed on a range of Brazilian food products, including coffee. The decision, issued through an Executive Order dated 20 November 2025, applies to goods entering the US on or after 13 November 2025. The baseline 10% tariff introduced earlier in the year remains active.

Brazil supplies a significant share of the green coffee used by the US market. When the combined import levy reached 50%, shipments between the two countries were severely disrupted. Industry data shared in August 2025 indicated a sharp drop in US purchases of Brazilian coffee during the month the extra charge took effect. Many US roasters faced higher operating costs, and retail coffee prices rose noticeably as companies redirected sourcing to alternative suppliers. Warehouses in Brazil also experienced delays as trading activity slowed.

Representatives of Brazil’s coffee export sector said the heightened tariff regime had effectively halted their ability to ship to the US, noting that clients paused new agreements immediately after the higher duty was introduced.

The trade disruption briefly shifted global buying patterns, with another major European importer receiving more Brazilian shipments during that period. Retail coffee prices in the US climbed significantly, reflecting the sudden supply imbalance.

The White House has begun reversing several import charges in recent weeks as domestic food inflation remains elevated. Earlier in November, the administration announced the removal or reduction of duties on coffee from multiple producing countries, including Vietnam and several South American origins.

Following indications that tariff reductions were forthcoming, the head of a leading US coffee trade association welcomed the policy shift, noting that easing import costs could help stabilize supply chains and reduce financial pressure on coffee drinkers and businesses across the country.