Arabica Coffee Prices Surge Amid Concerns Over Brazil’s Drought and Vietnam’s Harvest Delays
Arabica coffee futures (KCH25) climbed on Thursday, closing up +3.20 (+1.09%), while January ICE robusta coffee futures (RMF25) dropped slightly, closing down -11 (-0.23%). The mixed performance reflected contrasting market dynamics, with arabica prices touching new highs while robusta faced downward pressure.
March arabica coffee futures reached a contract high on Thursday, while December arabica futures hit a 13-year high for nearest-futures. A report by the USDA’s Foreign Agricultural Service (FAS) projected Brazil’s 2024/25 coffee production at 66.4 million metric tons (MMT), falling short of the USDA’s official estimate of 69.9 MMT. Additionally, Brazil’s coffee inventories for the end of the 2024/25 season in June were forecast at just 1.2 million bags, a significant 26% year-over-year decline.
Concerns over Brazil’s drought conditions have added upward pressure on prices. Since April, rainfall in key coffee-growing regions has remained well below average, hampering flowering and threatening the 2025/26 arabica crop. Brazil is reportedly experiencing its driest conditions since 1981, according to Cemaden, the country’s natural disaster monitoring agency.
While arabica prices soared, robusta prices dipped as profit-taking followed a weakening Brazilian real (^USDBRL), which hit a two-week low against the dollar. The currency drop encouraged export selling by Brazilian producers, adding to downward pressure on robusta futures.
Vietnam, the largest producer of robusta coffee, has also faced challenges. October coffee exports fell by 11.6% month-on-month to 45,412 MT, while exports from January to October dropped by 11.1% year-over-year to 1.15 MMT. Heavy rainfall has further compounded concerns, threatening to delay Vietnam’s coffee harvest. Vietnam’s agriculture department reported a 20% decline in coffee production for the 2023/24 crop year due to drought, with output at 1.472 MMT, the smallest in four years.
The International Coffee Organization (ICO) reported a significant 25% year-over-year increase in global coffee exports for September, totaling 10.76 million bags. However, it projected that global coffee production for 2023/24 would grow by 5.8% year-over-year to a record 178 million bags. Consumption is expected to rise by 2.2% to 177 million bags, leaving a slight surplus of 1 million bags.
Meanwhile, Brazil’s coffee exports remain robust. Cecafe reported that October green coffee exports rose 11% year-over-year to 4.57 million bags, with total exports for the 2023/24 season up 33% year-over-year to a record 47.3 million bags.
Tight inventory levels provided additional support for coffee prices. ICE-monitored arabica coffee inventories have rebounded from a 24-year low of 224,066 bags in November 2023 to 893,325 bags this week, a 2-1/3 year high. Conversely, ICE-monitored robusta coffee inventories fell to a 6-1/2 month low of 3,854 lots, although they remain above the record low of 1,958 lots seen in February 2024.
While global coffee production is forecast to grow, concerns over Brazil’s ongoing drought and Vietnam’s harvest delays are expected to keep markets volatile. Recent rainfall in Brazil temporarily eased concerns, with Minas Gerais, the country’s largest arabica-producing region, receiving 60.9 mm of rain last week—127% of the historical average. However, long-term production risks persist due to years of below-average rainfall.
As markets continue to weigh these dynamics, coffee prices are likely to remain sensitive to weather developments in Brazil and Vietnam, as well as broader macroeconomic factors like currency fluctuations and global demand trends.
