Coffee prices slipped on Friday as market pressures mounted amid forecasts of widespread rain in Brazil’s key coffee-growing region and evolving global supply dynamics. May arabica coffee (KCK25) closed down by 2.20%, marking a two-week low, while May ICE robusta coffee (RMK25) fell 2.37%.
In Minas Gerais, Brazil’s largest arabica-producing region, Somar Meteorologia forecasted widespread showers for next week, alleviating earlier concerns over a prolonged dry spell. However, support for prices was short-lived as other market factors added downward pressure. The region recorded just 1.1 mm of rain for the week ended March 8—merely 2% of the historical average—raising concerns over long-term crop impacts.
Market sentiment was further dampened by Marex Solutions’ report, which revised the global coffee surplus forecast for the 2025/26 season to 1.2 million bags, a significant increase from the surplus of 200,000 bags expected in the 2024/25 season. Meanwhile, robusta coffee faced its own set of challenges. Vietnam, the world’s leading robusta producer, reported a 6.6% increase in February exports, reaching 169,000 MT. However, drought conditions have taken their toll, with Vietnam’s 2023/24 robusta production dropping 20% to 1.472 million metric tons. Subsequent estimates for the 2024/25 season have been revised slightly downward by both the USDA FAS and the Vietnam Coffee and Cocoa Association.
Despite these bearish signals, some supportive factors have provided short-term relief. ICE-monitored robusta inventories fell to a 1½ week low of 4,288 lots, and the weakening U.S. dollar—evidenced by the dollar index tumbling to a 4¾ month low—helped stabilize prices momentarily. On the export front, Brazil’s February green coffee shipments declined 12% year-over-year, while Conab has projected a 4.4% drop in Brazil’s 2025/26 coffee crop to a three-year low of 51.81 million bags.
The impact of last year’s dry El Niño weather, combined with continued below-average rainfall in Brazil, has damaged coffee trees during the critical flowering stage. This not only jeopardizes the current season but also raises concerns about longer-term crop prospects in South and Central America. Colombia, the world’s second-largest arabica producer, is still recovering from the drought conditions that plagued the previous year.
USDA reports have painted a mixed picture for the coffee market. The latest projections indicate a modest increase in global production—1.5% for arabica and 7.5% for robusta—yet ending stocks are expected to drop by 6.6% to a 25-year low. In a further sign of uncertainty, Volcafe’s recent revision slashed its Brazil 2025/26 arabica production estimate by about 11 million bags following extensive drought assessments. The projection now foresees a wider global deficit of 8.5 million bags for the upcoming season, compared to a 5.5 million bag deficit for 2024/25.
As market participants brace for continued volatility, all eyes remain on weather forecasts and evolving global supply data that will likely dictate the trajectory of coffee prices in the coming months.