Global coffee prices fell sharply on Tuesday, pressured by concerns over weakening demand and improving supply prospects.
July arabica futures (KCN25) dropped by 2.50% to close down 10.25 cents, while July robusta futures (RMN25) declined 2.12%, down $115. The downturn came despite an early rally, as market sentiment shifted following new data showing that U.S. consumer confidence fell to its lowest level in nearly five years. The sharp decline raised concerns that discretionary spending, including coffee consumption, could soften in the months ahead.
Additional pressure on prices came from Brazil, the world’s largest coffee producer, where above-average rainfall has significantly improved soil moisture levels. Meteorological agency Somar reported that Minas Gerais, Brazil’s main arabica-growing region, received 38.7 mm of rain last week—nearly 490% above historical averages.
Increased stock levels also weighed on the market. ICE-monitored arabica coffee inventories rose to 826,304 bags on Monday, reaching a 2.5-month high.
Geopolitical and trade tensions added further uncertainty. The prospect of increased tariffs has raised fears that higher retail prices could suppress coffee demand in the U.S.
Despite Tuesday’s losses, arabica futures had earlier hit a 2.5-month high, while robusta touched a one-month high. This initial rally was fueled by a revised forecast from Rabobank, which projects Brazil’s 2025/26 arabica harvest will decline by 13.6% year-on-year to 38.1 million bags due to dry weather limiting the flowering phase of coffee trees. However, robusta supply may grow, with the bank estimating a 7.3% year-on-year increase to 24.7 million bags—a record high.
Currency fluctuations also played a role. A stronger Brazilian real reached a 3.5-week high against the U.S. dollar, discouraging exports from Brazilian growers and offering some support to prices.
Meanwhile, Brazil’s coffee export figures continue to show volatility. March exports fell 26% year-on-year to 2.95 million bags, according to Cecafe. In January, Brazil’s crop forecasting agency Conab estimated that the country’s 2025/26 coffee harvest would drop 4.4% to 51.81 million bags, a three-year low.
Last year’s El Niño weather pattern may continue to have lingering effects on crops in South and Central America. Brazil has experienced its driest conditions since 1981, while Colombia, the world’s second-largest arabica producer, is still recovering from a prolonged drought.
Robusta coffee remains underpinned by tight supplies from Vietnam, the world’s largest robusta exporter. Prolonged drought has led to a 20% drop in the 2023/24 crop year to 1.472 million metric tons, the smallest yield in four years. Vietnamese coffee exports fell 17.1% year-on-year to 1.35 million metric tons. The Vietnam Coffee and Cocoa Association also cut its 2024/25 output forecast to 26.5 million bags, down from an earlier estimate of 28 million.
On the supply side, Brazil reported a record 50.5 million bags in 2024 coffee exports—a 28.8% year-on-year increase. However, global figures remain mixed. The International Coffee Organization (ICO) noted a 12.4% year-on-year decline in December exports, with the first quarter showing a 0.8% annual drop.
The USDA’s December biannual report offered mixed signals. Global coffee production is projected to rise 4.0% year-on-year to 174.9 million bags in 2024/25. While arabica output is expected to grow modestly by 1.5%, robusta is forecasted to increase 7.5%. Yet, ending stocks are projected to fall by 6.6% to a 25-year low of 20.87 million bags.
Looking ahead, Volcafe has lowered its 2025/26 Brazilian arabica production estimate to 34.4 million bags, citing severe drought conditions. The firm also expects a widening global arabica deficit of 8.5 million bags, up from a previous estimate of 5.5 million.
Despite short-term volatility, weather conditions, currency trends, and trade policies will continue to shape the coffee market’s outlook in the months ahead.