Coffee prices surged on Tuesday as ongoing drought conditions in Brazil continued to impact supply. May Arabica futures rose by 2.54%, while May Robusta futures increased by 3.29%.
Meteorological reports indicated that Minas Gerais, Brazil’s largest Arabica coffee-producing region, received only 1.1 mm of rainfall during the week ending March 8, representing just 2% of the historical average. Additionally, the decline in the value of the U.S. dollar further supported coffee prices, making commodities more attractive to investors.
Despite the price increase, rising global coffee inventories have exerted downward pressure on the market. Arabica coffee stocks monitored by ICE climbed to a one-week high of 803,032 bags, while Robusta stocks reached a one-month high at 4,356 lots.
Market analysts predict that the global coffee surplus for the 2025/26 season could expand to 1.2 million bags, up from 200,000 bags in the 2024/25 season, potentially limiting further price gains in the long term.
Robusta prices faced additional pressure following an increase in Vietnamese coffee exports. According to Vietnam’s General Statistics Office, Vietnam’s February coffee exports rose by 6.6% year-on-year, reaching 169,000 metric tons. As the world’s largest producer of Robusta coffee, higher Vietnamese exports contribute to increased global supply, affecting price stability.
On the other hand, supply concerns continue to support coffee prices. Recent reports indicate that Brazil’s green coffee exports in January declined by 1.6% year-on-year, totaling 3.98 million bags. Additionally, Brazil’s official crop forecasting agency projected that the country’s 2025/26 coffee production will fall by 4.4% to 51.81 million bags, marking a three-year low.
Environmental reports suggest that Brazil is experiencing its driest weather since 1981, affecting the crucial flowering stage of coffee plants and reducing yield prospects for future harvests. Meanwhile, Colombia, the world’s second-largest Arabica producer, is still recovering from last year’s El Niño-induced drought.
Robusta production in Vietnam has also seen a significant decline. The country’s 2023/24 Robusta crop fell by 20% to 1.472 million metric tons, marking a four-year low. Forecasts indicate a slight decline in production for the 2024/25 season, with output expected to fall to 27.9 million bags from 28 million bags the previous season.
Brazil’s coffee exports have also played a significant role in shaping market dynamics. The country’s 2024 coffee exports increased by 28.8% to a record 50.5 million bags, according to industry reports.
However, global coffee shipments have declined. Data from the International Coffee Organization (ICO) revealed that December 2023 global coffee exports fell by 12.4% to 10.73 million bags, while total exports from October to December declined by 0.8% year-on-year, reaching 32.25 million bags.
Global coffee production forecasts have presented a mixed outlook. Reports suggest that global coffee production for the 2024/25 season will rise by 4% to 174.85 million bags, driven by a 1.5% increase in Arabica output to 97.84 million bags and a 7.5% rise in Robusta production to 77.01 million bags.
At the same time, global coffee stockpiles are projected to decline by 6.6% to 20.86 million bags by the end of the 2024/25 season, marking a 25-year low. Additionally, Brazil’s 2024/25 coffee production forecast was lowered to 66.4 million metric tons, down from the previous estimate of 69.9 million metric tons.
For the 2025/26 season, new estimates indicate that Brazil’s Arabica production will drop to 34.4 million bags, a reduction of 11 million bags from previous projections, highlighting the severe impact of prolonged drought conditions. Analysts expect a global Arabica coffee deficit of 8.5 million bags for 2025/26, widening from the 5.5 million bag shortfall in the 2024/25 season, marking the fifth consecutive year of global deficits.
With climate fluctuations and declining inventories affecting supply, coffee prices remain volatile. While strong global demand continues to support the market, increasing exports could limit further price surges in the near term.