Lower Brazil Coffee Crop Estimates Push Prices Higher Amid Global Supply Concerns

Coffee prices edged higher on Wednesday, supported by renewed concerns over supply constraints in Brazil, the world’s largest coffee producer. The July arabica futures contract (KCN25) rose by 0.24% to close at +0.95 cents, while July robusta (RMN25) climbed 1.34% (+71), continuing a price rally triggered by worsening crop forecasts and tight inventories.

The upward momentum in coffee markets follows a 2.5-month high for arabica and a one-month peak for robusta on Tuesday, driven largely by Rabobank’s latest projections for Brazil’s 2025/26 harvest. The bank estimates arabica production will fall by 13.6% year-on-year to 38.1 million bags due to prolonged dry weather, which severely impacted flowering in key arabica-growing regions.

In contrast, Rabobank expects robusta output in Brazil to increase by 7.3% year-on-year to a record 24.7 million bags, adding some balance to the overall supply outlook. Nonetheless, concerns remain heightened, particularly for arabica, which underpins much of the specialty coffee market.

The Brazilian coffee export picture is also compounding bullish sentiment. According to Cecafe, March 2025 exports of green coffee plunged by 26% compared to the same month last year, totaling just 2.95 million bags. This comes after Brazil’s crop agency Conab lowered its estimate for the current 2024 crop to 54.2 million bags, down 1.1% from its earlier forecast. It also projects a further 4.4% drop in the upcoming 2025/26 season, marking a three-year low at 51.81 million bags.

While recent rains in Minas Gerais, Brazil’s top arabica-producing region, have increased soil moisture — 38.7 mm reported in one week alone, or 490% above the historical average — this may be too late to reverse the damage caused by a year of unusually dry conditions. The country’s natural disaster monitoring agency, Cemaden, reports that Brazil has faced its driest weather since 1981.

ICE-monitored inventories are sending mixed signals. While robusta stockpiles fell to a four-month low of 4,225 lots on Wednesday, arabica inventories climbed to a 2.5-month high of 826,304 bags earlier in the week. The global outlook adds further complexity: the USDA’s December report forecasts a 4.0% increase in global coffee production for the 2024/25 season, reaching 174.85 million bags. However, global ending stocks are projected to fall to a 25-year low of 20.87 million bags — a 6.6% decline year-on-year.

Specifically, arabica production is expected to rise modestly by 1.5% to 97.84 million bags, while robusta is projected to grow 7.5% to 77 million bags. Yet rising global demand and consecutive years of deficits continue to weigh on long-term balance sheets.

Beyond Brazil, other major producers are also grappling with weather-induced challenges. In Vietnam — the world’s largest robusta exporter — production for the 2023/24 cycle dropped 20% to 1.47 million metric tons, marking the smallest harvest in four years. Export volumes fell 17.1% year-on-year to 1.35 million metric tons, according to the Vietnam General Statistics Office. The Vietnam Coffee and Cocoa Association has since lowered its production forecast for 2024/25 to 26.5 million bags, down from 28 million.

Meanwhile, Colombia, the second-largest producer of arabica coffee globally, is still recovering from the effects of last year’s El Niño-driven drought, which hampered yields and affected flowering patterns.

Adding to concerns, commodity trader Volcafe recently slashed its forecast for Brazil’s 2025/26 arabica crop to 34.4 million bags — a significant downgrade of 11 million bags from its earlier estimate. The firm now predicts a global arabica deficit of 8.5 million bags in 2025/26, deeper than the 5.5 million-bag shortfall in 2024/25. If realized, this would mark the fifth consecutive year of arabica deficits.

While recent rainfall in Brazil may offer some short-term relief, long-term concerns over production capacity and weather volatility continue to support coffee prices. With arabica inventories tightening and robusta under pressure from lower Vietnamese exports, the global coffee market remains on edge, with buyers and traders closely watching upcoming harvest data and export trends.