Coffee Prices: Dollar Pushes Arabica Up, Robusta Under Pressure
Arabica coffee prices closed higher on Friday, supported by a weaker U.S. dollar, while robusta coffee dipped on expectations of rising production from key origins. According to a market update published by Nasdaq, May arabica coffee futures (KCK25) rose by 0.30% (+1.15), while May ICE robusta coffee (RMK25) slipped 0.26% (-14).
The dollar’s decline provided momentum for arabica, making commodities priced in dollars more attractive to global buyers. In contrast, robusta faced downward pressure after Marex Solutions projected a significant increase in 2025/26 crop volumes: Vietnam’s robusta production is expected to reach 28.8 million bags, up 7.9% year-over-year, while Brazil’s output is forecast to grow by 13.6% to 25 million bags.
Mixed Signals from Weather and Inventory Data
Earlier in the week, both coffee types came under pressure. Arabica touched a one-month low, while robusta fell to a two-month low amid forecasts for widespread rain in Brazil, easing previous dryness concerns. Meteorologists at Climatempo and Somar noted that Minas Gerais, Brazil’s top arabica region, received 31.2 mm of rain last week, or 102% of the historical average.
Yet, weather-driven price support emerged mid-week, as arabica hit a three-week high. Cooxupé, Brazil’s largest arabica cooperative, warned that recent high temperatures and scarce rainfall could negatively impact yields in 2025. Similar concerns were reported in Vietnam’s Central Highlands, where the local weather office warned of hotter, drier conditions through late March.
Inventories & Exports Paint a Complex Picture
Inventory data remains mixed. ICE-monitored arabica stocks fell to a five-week low of 771,576 bags, while robusta inventories climbed to a seven-week high of 4,414 lots, according to Nasdaq.
Brazil’s February green coffee exports declined 12% year-over-year to 3 million bags, as reported by Cecafe. Conab, Brazil’s crop forecasting agency, expects the country’s 2025/26 coffee output to fall 4.4% to 51.81 million bags, its lowest level in three years. Meanwhile, Vietnam’s 2024 coffee exports fell 17.1% y/y to 1.35 million metric tons, and production dropped by 20% in 2023/24 due to drought, marking the smallest harvest in four years.
However, recent increases in global exports are seen as bearish. Brazil’s coffee exports in 2024 rose 28.8% y/y to a record 50.5 million bags, and Vietnam’s February shipments rose 6.6% y/y.
Supply Outlook: Surpluses and Deficits Clash
Marex Solutions recently projected a global surplus of 1.2 million bags for 2025/26, compared to just 200,000 bags in 2024/25. Yet, long-term supply risks remain due to lingering effects of last year’s El Niño, which caused widespread drought in South and Central America. Brazil, in particular, is experiencing its driest weather since 1981, according to Cemaden, affecting the flowering phase of arabica trees.
The USDA’s December report highlighted that global coffee production for 2024/25 is expected to rise 4% to 174.86 million bags, with arabica and robusta up by 1.5% and 7.5%, respectively. Yet, ending stocks are projected to fall 6.6% to a 25-year low of 20.87 million bags.
The USDA also revised Brazil’s 2024/25 production forecast down to 66.4 million metric tons, and projected a 26% decline in ending stocks to 1.2 million bags.
Additionally, Volcafe sharply reduced its forecast for Brazil’s 2025/26 arabica crop to 34.4 million bags, citing prolonged drought. The firm expects a global arabica deficit of 8.5 million bags, compared to a 5.5 million bag shortfall in 2024/25—marking the fifth consecutive year of arabica deficits.
