Coffee Prices Tumble as Global Supply Outlook Improves Despite Long-Term Deficit Fears

Global coffee prices have fallen sharply this week, with both arabica and robusta futures plunging to multi-month lows as traders react to a more optimistic short-term supply outlook, particularly in Brazil and Vietnam. July arabica contracts dropped by 3.31% to a five-month low, while robusta prices tumbled nearly 7% to hit a one-year low, reflecting the markets’ heightened sensitivity to ongoing harvest updates and weather patterns in major producing regions.

According to Safras & Mercado, Brazil’s 2025/26 coffee harvest reached 35% completion by June 11—slightly below last year’s pace (37%) but aligned with the five-year average. Notably, robusta harvesting is further along at 49%, while arabica remains slower at 26%, hampered by intermittent rains across key growing zones like Minas Gerais. Meteorological data from Somar confirms that the region received 10.6 mm of rainfall in the week ending June 14—131% above the seasonal average—alleviating drought concerns and further weighing on prices.

Brazil’s largest coffee cooperative, Cooxupe, also reported progress: 13.7% of its harvest was complete as of June 11, increasing to 17.8% by June 13. Although these figures reflect a gradual pace, they point to steady supply growth that has pressured market sentiment.

Adding to the bearish trend are forecasts from the USDA’s Foreign Agricultural Service, which projects a 0.5% year-on-year increase in Brazil’s 2025/26 output, reaching 65 million bags. Similarly, Vietnam’s production is expected to rise by 6.9% to 31 million bags, driven by improving weather and recovery efforts following last year’s severe drought, which slashed yields by 20%—the lowest in four years.

Nonetheless, robusta markets may find some support amid lingering concerns over stock levels. ICE-monitored inventories of robusta hit a one-month low of 5,150 lots this week. In contrast, arabica inventories remain elevated at around 860,000 bags—near a 4.5-month high—adding downward pressure to arabica prices.

Despite the near-term bearish outlook, underlying structural concerns remain. Brazil’s green coffee exports fell sharply by 36% year-over-year in May, according to Cecafe, signaling that logistical bottlenecks and internal market dynamics could still support price rebounds. Moreover, the USDA’s December 2024 report points to a 6.6% decline in global ending stocks for the 2024/25 season, reaching a 25-year low of 20.867 million bags.

Looking further ahead, Volcafe projects a deepening global arabica deficit for the 2025/26 marketing year—estimated at 8.5 million bags, up from 5.5 million bags in 2024/25. If realized, this would mark the fifth consecutive year of arabica shortfalls, raising long-term sustainability and pricing concerns for producers and buyers alike.

While global coffee production for 2024/25 is projected to grow by 4% to 174.9 million bags—driven largely by a 7.5% rise in robusta output—analysts warn that such gains may not offset consumption trends, climate variability, and declining stock levels in the years to come.

For now, however, the immediate focus remains on Brazil’s and Vietnam’s harvest progress, weather conditions, and inventory signals, which continue to shape short-term price volatility in global coffee markets.