December arabica coffee (KCZ25) on Thursday closed down -0.80 (-0.21%), and November ICE robusta coffee (RMX25) closed up +44 (+0.98%).
Coffee prices on Thursday settled mixed, with robusta coffee climbing to a 1-week high and arabica falling back further from Tuesday's 4-month high. The lack of rain in Brazil's coffee-growing regions ahead of the critical flowering period for coffee trees is underpinning coffee prices. Somar Meteorologia reported Monday that Brazil's largest arabica coffee-growing area, Minas Gerais, received no rain during the week ended September 6. However, arabica coffee gave up early gains and turned lower Thursday after Climatempo said rainfall in Brazil's Minas Gerais region is expected to intensify next week.
Strength in the Brazilian real is bullish for coffee prices as the real (^USDBRL) on Thursday rallied to a 14-month high against the dollar. The stronger real discourages export sales from Brazil's coffee producers.
Coffee prices also have support from tighter ICE coffee inventories. ICE-monitored arabica inventories fell to a 16-month low of 669,991 bags on Thursday. ICE robusta coffee inventories fell to a 2-week low Thursday at 6,563 lots, just above the 7-week low of 6,552 lots from August 28.
Coffee prices found support last Thursday after Conab, Brazil's crop forecasting agency, cut its Brazil 2025 arabica coffee crop estimate by -4.9% to 35.2 million bags from a May forecast of 37.0 million bags. Conab also cut its total Brazil 2025 coffee production estimate by -0.9% to 55.2 million bags from a May estimate of 55.7 million bags.
News of reduced coffee exports is supportive for prices after the International Coffee Organization (ICO) last Wednesday reported that global July coffee exports fell -1.6% y/y to 11.6 million bags, and cumulative Oct-Jul coffee exports fell -0.3% y/y at 115.615 million bags.
Concerns about tighter US coffee supplies due to tariffs are bullish for prices. American buyers are voiding new contracts for purchases of Brazilian coffee beans due to the 50% tariffs imposed on US imports from Brazil, thereby tightening US supplies, as about a third of America's unroasted coffee comes from Brazil.
Harvest pressures in Brazil are bearish for coffee prices after Brazil's Cooxupe coffee co-op announced Tuesday that the harvest among its members was 97% complete as of September 5. Cooxupe is Brazil's largest coffee cooperative and Brazil's largest exporter group. Separately, Safras & Mercado reported on August 22 that Brazil's overall 2025/26 coffee harvest was 99% complete as of August 20, ahead of the comparable level of 98% last year. The breakdown showed that 100% of the robusta harvest and 98% of the arabica harvest were complete as of August 20.
Reduced exports from Brazil are supporting prices. On August 6, Brazil's Trade Ministry reported that Brazil's July unroasted coffee exports fell -20.4% y/y to 161,000 MT. In related bullish news, exporter group Cecafe reported that Brazil's green coffee exports in July fell -28% y/y to 2.4 million bags. Cecafe reports that July arabica exports fell -21% y/y, while robusta exports plunged -49% y/y. Cecafe said Brazil's July coffee exports fell -28% to 2.7 million bags, and that coffee shipments during Jan-July fell -21% to 22.2 million bags.
Due to drought, Vietnam's coffee production in the 2023/24 crop year decreased by -20% y/y to 1.472 MMT, the smallest crop in four years. Also, Vietnam's General Statistics Office reported that 2024 Vietnam coffee exports fell by -17.1% y/y to 1.35 MMT. Additionally, the Vietnam Coffee and Cocoa Association reduced its 2024/25 Vietnam coffee production estimate to 26.5 million bags on March 12, down from a December estimate of 28 million bags. By contrast, the Vietnam National Statistics Office reported Monday that Vietnam's Jan-Aug 2025 coffee exports were up +7.8% y/y to 1.141 MMT.
The USDA's Foreign Agriculture Service (FAS) projected on June 25 that world coffee production in 2025/26 will increase by +2.5% y/y to a record 178.68 million bags, with a -1.7% decrease in arabica production to 97.022 million bags and a +7.9% increase in robusta production to 81.658 million bags. FAS forecasted that Brazil's 2025/26 coffee production will increase by +0.5% y/y to 65 million bags and that Vietnam's 2025/26 coffee output will rise by 6.9% y/y to a 4-year high of 31 million bags. FAS forecasts that 2025/26 ending stocks will climb by +4.9% to 22.819 million bags from 21.752 million bags in 2024/25. However, Volcafe is projecting a global 2025/26 arabica coffee deficit of -8.5 million bags, wider than the -5.5 million bag deficit for 2024/25 and the fifth consecutive year of deficits.
