Global Coffee Prices Mixed as Supply Outlook Improves

Global coffee prices showed mixed movement on Friday, May 10, as market optimism over improving supply tempered earlier gains fueled by weather-related concerns and tariff-driven demand pressure.

Arabica and Robusta Prices Diverge

July Arabica coffee futures (KCN25) ended the day slightly higher, gaining +0.40 points (+0.10%), while July Robusta futures (RMN25) declined -39 points (-0.74%). This divergence reflects a shifting supply-demand balance in major producing countries.

Improved Supply Forecasts Weigh on Market

The U.S. Department of Agriculture (USDA) recently forecasted a +5.1% year-over-year increase in Honduras’ coffee production for the 2025/26 season, reaching 5.8 million bags, reinforcing the perception of ample future supply.

Brazil’s outlook continues to drive headlines. Consultancy firm Safras & Mercado upgraded its 2025/26 Brazil coffee crop estimate from 62.45 million to 65.51 million bags, citing better-than-expected conditions. Similarly, Conab, Brazil’s crop agency, raised its 2025 output forecast to 55.7 million bags, up from 51.81 million in January.

Inventory Builds Pressure Prices

Coffee stockpiles continue to grow. As of Friday:

ICE-monitored Robusta coffee inventories reached a 3-month high of 4,418 lots.
Arabica inventories climbed to a 2¾-month high of 844,473 bags midweek.

These rising inventories are placing downward pressure on futures prices.

Demand Outlook Uncertain Amid Tariffs

Demand-side sentiment remains cautious. Major global importers like Starbucks, Mondelez International, and Hershey have warned that the U.S. baseline 10% tariff on imports will likely push prices higher for consumers and reduce sales volumes.

Weather Concerns Provide Some Price Support

Despite stronger supply projections, adverse weather in Brazil continues to support market prices. Somar Meteorologia reported that Minas Gerais, Brazil’s largest Arabica-producing region, received only 1.5 mm of rain during the week ending April 26—just 21% of its historical average. This could negatively impact flowering and yields in upcoming seasons.

Robusta Market Faces Ongoing Constraints

Robusta prices remain supported by tighter supplies in Vietnam, the world’s largest Robusta exporter. Key stats:

Jan–Apr 2025 exports fell -9.8% y/y to 663,000 metric tons.
2023/24 crop was down -20% to 1.472 million metric tons, the lowest in four years.
2024 exports declined -17.1% y/y to 1.35 million metric tons.
The Vietnam Coffee and Cocoa Association cut its 2024/25 output forecast to 26.5 million bags, down from 28 million.

However, Brazil’s Robusta output may offset some of these losses. Rabobank estimates Brazil’s 2025/26 Robusta harvest will rise +7.3% y/y to a record 24.7 million bags.

Global Trade Fluctuations Add to Volatility

Brazil’s 2024 coffee exports surged +28.8% y/y to a record 50.5 million bags, per Conab. However, the International Coffee Organization (ICO) reported a -2.1% y/y drop in Oct–Mar 2024/25 global exports, totaling 67.73 million bags, pointing to trade volatility.

USDA Projects Higher Output But Falling Stocks

The USDA Foreign Agriculture Service (FAS) projected:

Global coffee production to rise +4.0% y/y to 174.86 million bags in 2024/25.
- Arabica: up +1.5% to 97.85 million bags
- Robusta: up +7.5% to 77.01 million bags
Ending stocks to fall -6.6% to 20.87 million bags, a 25-year low.

Brazil’s stockpile at the end of the 2024/25 season is expected to shrink -26% y/y, to 1.2 million bags.

Deficit Outlook for 2025/26

Looking ahead, Volcafe projects a global arabica coffee deficit of -8.5 million bags for the 2025/26 marketing year, up from a -5.5 million bag shortfall in 2024/25. The downgrade is attributed to drought-affected crop conditions in Brazil, where arabica production is now forecast at 34.4 million bags, a steep drop from previous estimates.

Conclusion

Coffee prices are navigating a complex landscape shaped by improving production forecasts, growing inventories, tariff impacts, and climate-related uncertainties. While robusta remains constrained due to Vietnamese drought, Arabica faces mixed signals from Brazil. Traders and industry stakeholders will continue to monitor weather developments, policy changes, and global stock levels closely.

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