Coffee Prices Rebound as Brazilian Real Strengthens
Coffee prices recovered from early losses on Monday, buoyed by gains in the Brazilian real, which reached an eight-month high against the U.S. dollar. The stronger real discouraged export selling by Brazilian producers, lending support to global coffee markets.
As of midday trading, July arabica futures (KCN25) rose by 0.89% to +3.20 cents, while July robusta futures (RMN25) climbed 1.58% to +$70.
Earlier in the day, prices were under pressure following weather updates from Brazil. Meteorological agency Somar reported that the state of Minas Gerais, the country’s top arabica-producing region, received 23.4 mm of rainfall during the week ending June 7 — a significant 207% of the seasonal average. This alleviated some concerns about drought-related crop damage.
Adding further weight to the market, Brazil’s 2025/26 coffee harvest is progressing steadily. As of June 4, it was 28% complete, slightly above the five-year average of 27%, according to data from Safras & Mercado.
Despite today’s rebound, coffee prices have been under pressure in recent weeks. Arabica fell to a two-month low last Tuesday, while robusta dropped to its lowest level in over seven months. The declines followed USDA forecasts from May 19, which projected increased production for both Brazil and Vietnam — the world’s top arabica and robusta producers, respectively. Brazil’s output is expected to rise 0.5% year-over-year to 65 million bags, while Vietnam’s is projected to jump 6.9% to 31 million bags.
Inventory data has also weighed on prices. ICE-monitored robusta stocks rose to an 8.75-month high of 5,438 lots as of May 30. Arabica inventories climbed to a 4.25-month high of 892,468 bags on May 27.
On the supply side, production estimates continue to trend upward. On May 9, the USDA forecasted a 5.1% increase in Honduras’ 2025/26 output to 5.8 million bags. Safras & Mercado revised its estimate for Brazil’s crop upward to 65.51 million bags, from a previous 62.45 million. Conab, Brazil’s official crop forecasting agency, also raised its outlook to 55.7 million bags, up from January’s 51.81 million.
However, bullish factors persist. Brazil’s coffee exports have declined, providing some support for prices. Cecafe reported that April green coffee exports fell 28% year-over-year to 3.05 million bags, while total exports from January through April dropped 15.5% to 13.19 million bags.
Robusta prices are also finding support amid reduced output in Vietnam. The country’s 2023/24 crop fell 20% to 1.472 million metric tons (MMT), the smallest harvest in four years. According to the General Statistics Office, 2024 exports were down 17.1% year-over-year to 1.35 MMT. Between January and May 2025, exports declined 1.8% to 813,000 MT. In March, the Vietnam Coffee and Cocoa Association lowered its 2024/25 forecast to 26.5 million bags from a prior estimate of 28 million. Nonetheless, the USDA projects a rebound, forecasting 2025/26 output at 30 million bags — a four-year high.
Globally, the USDA’s December 18 biannual report predicted that world coffee production in 2024/25 would rise by 4% to 174.86 million bags. Arabica output is expected to increase by 1.5% to 97.85 million bags, while robusta is set to grow 7.5% to 77.01 million bags. Despite the production boost, ending stocks are forecasted to fall 6.6% to a 25-year low of 20.87 million bags.
In Brazil specifically, the USDA’s November 22 estimate for 2024/25 coffee production stands at 66.4 million bags, lower than the previous 69.9 million. Ending stocks are projected at just 1.2 million bags — a 26% year-over-year decline.
Looking ahead to the 2025/26 season, coffee trader Volcafe has revised its Brazilian arabica production estimate down to 34.4 million bags, citing the effects of prolonged drought. This is a reduction of 11 million bags compared to its earlier forecast. Volcafe also projects a global arabica deficit of 8.5 million bags for 2025/26, up from the 5.5 million bag shortfall expected in 2024/25 — marking the fifth consecutive year of supply deficits.
