Coffee Prices Slide as Stronger Dollar Weighs on Market
Coffee futures were mostly lower today as a stronger U.S. dollar pressured commodity markets. May arabica coffee (KCK25) fell by 4.50 cents (-1.15%), while May ICE robusta coffee (RMK25) remained flat.
The U.S. dollar index climbed to a two-week high, weighing on coffee prices. However, robusta losses were limited due to weather concerns in Vietnam. The Dak Lak weather office reported that the Central Highlands, Vietnam’s main coffee-producing region, will likely see hotter temperatures and reduced rainfall through the end of March. Vietnam is the world’s top robusta producer.
Robusta inventories are on the rise, adding bearish pressure. ICE-monitored robusta stocks climbed to a six-week high of 4,360 lots. In contrast, arabica inventories fell to a one-month low of 782,489 bags.
In Brazil, insufficient rainfall is creating bullish sentiment for arabica. Somar Meteorologia reported that Minas Gerais—Brazil’s largest arabica-producing area—received just 30.8 mm of rain in the week ending March 15, only 71% of the historical average. Cooxupé, Brazil’s largest arabica cooperative, warned that high temperatures and dry weather last month may impact yields negatively this year.
Brazil’s February green coffee exports also declined 12% year-on-year to 3 million bags, according to Cecafe. Additionally, Brazil’s crop agency Conab projected that the 2025/26 coffee crop will fall 4.4% year-on-year to a three-year low of 51.81 million bags. It also revised the 2024 crop estimate down by 1.1% to 54.2 million bags.
Despite current supply concerns, bearish forecasts are emerging. Marex Solutions expects the global coffee surplus to widen to 1.2 million bags in the 2025/26 season, up from 200,000 bags in 2024/25.
Additional pressure on robusta prices came from Vietnam’s General Statistics Office, which reported a 6.6% year-on-year rise in February coffee exports, reaching 169,000 metric tons.
Dry conditions caused by last year’s El Niño continue to affect coffee production in South and Central America. Brazil is experiencing its driest period since 1981, according to disaster monitoring center Cemaden, threatening flowering stages of arabica crops. Colombia, the second-largest arabica producer, is still recovering from last year’s drought.
In Vietnam, drought slashed 2023/24 robusta production by 20% to 1.472 million metric tons—the smallest crop in four years. The USDA’s FAS estimates Vietnam’s 2024/25 robusta output will decline slightly to 27.9 million bags, down from 28 million bags. Meanwhile, the Vietnam Coffee and Cocoa Association revised its 2024/25 production forecast down to 26.5 million bags from a previous 28 million.
While Brazil’s coffee exports reached a record 50.5 million bags in 2024 (up 28.8% year-on-year), the International Coffee Organization (ICO) reported a 12.4% year-on-year decline in December global coffee exports, and a 0.8% decline for the October–December quarter.
The USDA’s December biannual report offered mixed implications. Global production for 2024/25 is projected to rise by 4% to 174.86 million bags, including a 1.5% rise in arabica and 7.5% in robusta. However, global ending stocks are expected to fall by 6.6% to a 25-year low of 20.87 million bags.
Brazil’s 2024/25 production is forecast at 66.4 million metric tons, down from a previous 69.9 million. Ending stocks in Brazil are projected at 1.2 million bags, a 26% year-on-year drop.
Volcafe recently downgraded its 2025/26 Brazil arabica production forecast to 34.4 million bags—a reduction of 11 million bags from September—following a crop tour that revealed severe drought damage. The trader now expects a global arabica deficit of 8.5 million bags in 2025/26, up from 5.5 million in 2024/25. If accurate, this would mark the fifth consecutive year of arabica deficits.
