September arabica coffee (KCU25) today is up +1.20 (+0.39%), and September ICE robusta coffee (RMU25) is up +121 (+3.43%).
Coffee prices are moving higher today, with robusta recovering from a 13-1/4 month low. Today's slide in the dollar index (DXY00) to a 3-1/4 year low has sparked short covering in coffee futures. Gains in robusta coffee prices accelerated today on signs of smaller supplies after ICE-monitored robusta coffee inventories fell to a 5-week low of 5,108 lots.
Coffee prices have been hammered this week, with arabica coffee falling to a 5-1/2 month low on Wednesday. The risk of frost in Brazil was taken out of weather forecasts for Brazil's coffee-growing regions of São Paulo and Minas Gerais, undercutting coffee prices.
Coffee prices have been under pressure over the past seven weeks due to concerns about higher coffee production and ample supplies. Brazil's ongoing coffee harvest is weighing on prices as Safras & Mercado recently reported that Brazil's 2025/26 coffee harvest was 35% complete as of June 11, slightly behind last year's comparable level of 37% but in line with the 5-year average of 35%. The breakdown showed that 49% of the robusta harvest and 26% of the arabica harvest were complete as of June 11. Brazil's arabica harvest has been slowed by heavy rain in some areas.
Meanwhile, Brazil's Cooxupe coffee co-op announced Tuesday that its members reported the coffee harvest was only 24.3% complete as of June 20, compared with 34.2% completed at the same time last year. Cooxupe is Brazil's largest coffee cooperative and Brazil's largest exporter of coffee.
Below-normal rainfall in Brazil is supportive for coffee prices. On Monday, Somar Meteorologia reported that Brazil's largest arabica coffee-growing area, Minas Gerais, received no rain during the week ended June 21.
On Wednesday, the USDA's Foreign Agricultural Service (FAS) forecast that Brazil's 2025/26 coffee production will increase by 0.5% year-over-year (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. Brazil is the world's largest producer of arabica coffee, and Vietnam is the world's largest producer of robusta coffee.
In a bearish factor for arabica prices, ICE-monitored arabica coffee inventories rose to a 4-3/4 month high of 892,468 bags on May 27 and were modestly below that high at 854,2068 bags as of Wednesday.
Smaller coffee exports from Brazil are bullish for prices. Last Wednesday, Cecafe reported that Brazil's May green coffee exports fell by -36% y/y to 2.8 million bags.
Due to drought, Vietnam's coffee production in the 2023/24 crop year decreased by 20% to 1.472 MMT, the smallest crop in four years. Also, Vietnam's General Statistics Office reported that 2024 Vietnam coffee exports fell -17.1% y/y to 1.35 MMT. Last Tuesday, Vietnam's National Statistics Office reported that Vietnam's 2025 Vietnam's Jan-May coffee exports are down -1.8% y/y to 813,000 MT. In addition, the Vietnam Coffee and Cocoa Association on March 12 cut its 2024/25 Vietnam coffee production estimate to 26.5 million bags from a December estimate of 28 million bags.
The USDA's biannual report, released on Wednesday, was bearish for coffee prices. The USDA's Foreign Agriculture Service (FAS) projected that world coffee production in 2025/26 will increase +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. The USDA's 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.
For the 2025/26 marketing year, Volcafe projects 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.
