Coffee prices rallied on Tuesday, May 13, 2025, recovering from a sharp decline in the previous session, as support from Brazil’s currency and reduced export volumes reignited market momentum. July arabica futures rose by 1.29% (+4.80 points), while July robusta futures gained 1.41% (+71 points), reversing Monday’s losses that pushed both contracts to multi-week lows.
The upswing was largely driven by the strengthening of the Brazilian real, which climbed to a five-week high. A stronger real typically makes Brazilian coffee more expensive in global markets, discouraging producers from selling and slowing down export flows. This shift sparked short covering in coffee futures, creating bullish momentum after the prior day’s drop.
The Brazilian export slowdown added further support. According to Cecafe, Brazil’s green coffee exports in April dropped by 28% year-on-year to 3.05 million bags. For the first four months of 2025, total exports declined by 15.5% compared to the same period in 2024, totaling 13.186 million bags. These figures surprised the market, especially after forecasts earlier in the year had pointed toward a supply rebound.
Despite this bullish news, the global coffee market remains under pressure from broader supply growth. The USDA recently projected a 5.1% increase in Honduras’ 2025/26 coffee production, reaching 5.8 million bags. Safras & Mercado raised its estimate for Brazil’s upcoming crop to 65.51 million bags, while Brazil’s official agency, Conab, now expects 55.7 million bags for 2025, up from 51.81 million previously.
Inventory levels are also on the rise, contributing to bearish sentiment. ICE-monitored robusta stocks climbed to a 3.5-month high of 4,557 lots, and arabica inventories reached 844,473 bags last week—their highest level in nearly three months. These growing reserves may counterbalance short-term supply concerns.
Vietnam’s robusta supply continues to face tightness. From January to April 2025, Vietnam’s coffee exports fell 9.8% year-on-year to 663,000 metric tons. Drought has already slashed the 2023/24 harvest by 20%, the lowest output in four years. The Vietnam Coffee and Cocoa Association cut its 2024/25 forecast to 26.5 million bags, down from 28 million. However, Brazil may offset this with a projected 7.3% rise in robusta production, reaching a record 24.7 million bags.
Longer-term projections point to continued market tightening. Rabobank forecasts a 13.6% decline in Brazil’s 2025/26 arabica crop to 38.1 million bags due to dry weather affecting flowering. Volcafe has echoed this concern, lowering its arabica production forecast to 34.4 million bags and projecting a global deficit of 8.5 million bags—the fifth consecutive year of arabica shortages.
Meanwhile, demand concerns remain a risk factor. Companies such as Starbucks and Mondelez have warned that the U.S. 10% import tariff could push prices higher and suppress sales volumes. Rising costs at the consumer level may dampen demand just as supply conditions start to tighten again.
Weather conditions in Brazil add another layer of uncertainty. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica-producing region, received just 0.8 mm of rain in the week ending May 10, only 16% of the historical average. The lack of rainfall may impact flowering and yield for future harvests, particularly in the 2025/26 season.
The global coffee market remains in a delicate balance between short-term supply recovery and structural tightening. While stronger currency dynamics and slowing exports have lifted prices this week, rising inventories and production forecasts continue to weigh on the outlook. Traders will be watching weather conditions, government data, and trade flows closely in the coming weeks to assess the sustainability of the current rebound.
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