Nasdaq: Global Coffee Prices Tumble Amid Market Volatility and Export Pressure

Coffee prices saw a steep decline on Friday, with May Arabica contracts falling by 5.07% to reach a two-month low, and May Robusta down by 4.82%, hitting their lowest level in two and a half months. According to Nasdaq, the drop was driven by a widespread risk-off sentiment in global markets, which pressured most commodities, including coffee. Concerns are also mounting that rising tariffs could raise retail prices for consumers and dampen overall demand.

The Brazilian real weakened to a three-week low against the U.S. dollar, prompting increased export activity from Brazilian producers. As Nasdaq reported, this added further pressure to prices, especially for Arabica, as Brazil remains the world’s largest coffee exporter.

While previous fears over dry weather in Brazil have eased, long-term supply concerns remain. Somar Meteorologia recently reported that Brazil’s key Arabica-producing region of Minas Gerais received 31.1 mm of rain in the last week of March—114% of the historical average. Nonetheless, Brazil’s coffee export data points to tightening supply: Cecafé revealed a 12% year-over-year drop in February green coffee exports, totaling 3 million bags. Brazil’s official crop agency, Conab, also lowered its 2024 crop estimate to 54.2 million bags and projects a further decline to 51.81 million bags for the 2025/26 season, the lowest in three years.

ICE-monitored inventories reflect similar trends. Arabica stocks fell to a one-and-a-half-month low of 770,476 bags, while Robusta stocks dropped to a three-week low of 4,308 lots. Brazil’s largest Arabica cooperative, Cooxupé, has also warned that recent high temperatures and below-average rainfall may negatively impact this year’s yields.

The effects of last year’s El Niño are still being felt across Latin America. Brazil is reportedly experiencing its driest weather since 1981, affecting flowering and harvest potential for upcoming seasons. Colombia, the second-largest Arabica producer, continues to recover from drought conditions as well.

On the Robusta front, Vietnam is facing ongoing supply constraints. Its 2023/24 coffee production dropped by 20% to 1.472 million metric tons—the lowest level in four years—while exports in the first quarter of 2024 were down 15.3% year-over-year. The Vietnam Coffee and Cocoa Association recently lowered its 2024/25 production forecast from 28 million bags to 26.5 million. However, expectations for a rebound in 2025/26 persist, with Marex Solutions projecting Vietnam’s Robusta production to rise to 28.8 million bags, alongside a 13.6% increase in Brazil’s Robusta output to 25 million bags.

Marex Solutions also forecasts that the global coffee surplus will expand in the 2025/26 season to 1.2 million bags, up from 200,000 bags in 2024/25. Nevertheless, drought-linked revisions may tighten the outlook once again. Volcafe, following a crop tour, cut its 2025/26 Brazil Arabica forecast by nearly 11 million bags, projecting a total of 34.4 million. The firm also estimates an 8.5 million bag global Arabica deficit next season—the fifth consecutive year of deficit.

On the demand side, USDA’s Foreign Agriculture Service expects global coffee production to increase by 4% in 2024/25 to 174.86 million bags, split between a 1.5% rise in Arabica and a 7.5% rise in Robusta. Still, the report projects a 6.6% drop in ending stocks, bringing global reserves to a 25-year low of 20.87 million bags. The USDA also forecasts Brazil’s coffee inventories will fall to 1.2 million bags by the end of the 2024/25 season, down 26% year-over-year.

Global export figures remain mixed. Brazil’s coffee exports in 2024 rose 28.8% year-over-year to a record 50.5 million bags, according to Conab. Meanwhile, data from the International Coffee Organization showed global exports fell 12.4% in December and slipped 0.8% year-over-year in the October-to-December quarter.