Weather Risks in Brazil Push Coffee Prices Higher
Dubai, July 25, 2025 (qahwaworld) — Global coffee prices rose on Thursday as weather concerns in Brazil raised fears of crop damage during a critical phase of the harvest season.
According to meteorologist Climatempo, a cold front moving through Brazil’s main coffee-growing regions this week has increased the risk of frost — a threat that could severely impact Arabica crops in areas like Minas Gerais, the country’s largest coffee-producing state.
Adding to the bullish sentiment is persistent dryness. Weather service Somar Meteorologia reported that Minas Gerais received no rainfall during the week ending July 19, exacerbating stress on coffee trees and further tightening supply outlooks.
Market Movement and Fund Positioning
On Thursday, September Arabica futures rose by +0.60%, while September Robusta climbed +1.27%. Analysts noted that speculative funds continue to hold excessive short positions in Robusta, which could spark a strong short-covering rally if prices break higher. As of July 15, funds increased their net short positions in Robusta to 1,294 contracts, the highest level in two years.
Harvest Pressures and Inventory Fluctuations
Despite weather risks, harvest pressure is capping gains. According to a report by Safras & Mercado, Brazil’s 2025/26 coffee harvest was 77% complete as of July 16 — ahead of last year’s pace of 74% and the five-year average of 69%. Robusta harvest was 93% complete, and Arabica reached 67% by July 9. Brazil’s largest coffee cooperative, Cooxupé, reported its members had harvested 59% of their crop by July 18.
In terms of inventories, ICE-monitored Robusta stockpiles climbed to a one-year high of 6,519 lots on Thursday, while Arabica inventories fell to a three-month low of 806,062 bags.
Export Decline Adds Support
Brazil’s green coffee exports also declined sharply. According to Cecafé, June exports fell by 31% year-over-year to 2.3 million bags, with Arabica exports down 27% and Robusta plunging 42%. The lower export volume helped support prices despite harvest pressure.
Geopolitical Risks and Trade Tensions
Market sentiment was also influenced by geopolitical developments. Former U.S. President Donald Trump announced a 50% tariff on imports from Brazil, effective August 1, raising concerns about disruptions to the global supply of Arabica — for which Brazil is the world’s leading producer.
Mixed Outlook from USDA and Vietnam Data
On the macro side, the USDA’s June report projected that global coffee production will rise 2.5% year-over-year in the 2025/26 season to a record 178.68 million bags. Arabica output is expected to decline 1.7% to 97.02 million bags, while Robusta is forecast to increase 7.9% to 81.66 million bags.
The USDA also expects ending stocks to rise 4.9% to 22.82 million bags in 2025/26.
Meanwhile, Vietnam’s Coffee and Cocoa Association reduced its 2024/25 crop estimate to 26.5 million bags, down from a prior forecast of 28 million. However, exports during the first half of 2025 were up 4.1% year-over-year to 943,000 metric tons, according to Vietnam’s General Statistics Office.
Deficit Warning
Despite the overall production outlook, Volcafe projected a global Arabica deficit of 8.5 million bags in 2025/26 — wider than the 5.5 million bag deficit in 2024/25 — marking the fifth consecutive year of supply shortfall for Arabica.
