Arabica Coffee Prices Supported by Dry Weather in Brazil
Arabica coffee prices have risen due to dry weather conditions in Brazil, affecting crop yields. While robusta prices declined due to forecasted rain in Vietnam, supply tightness continues from falling inventories and increased sales of existing crops. Furthermore, production estimates for Brazil’s coffee are revised downward, indicating potential supply deficits moving forward.
Arabica coffee prices have been positively impacted by adverse weather conditions in Brazil. On Wednesday, May arabica coffee (KCK25) rose by 2.90%, while robusta coffee closed slightly lower due to expectations of increased rainfall in Vietnam. Somar Meteorologia indicated that ongoing dry and hot weather in Brazil poses risks to coffee crops, particularly as they enter the critical final development stages ahead of the May harvest.
Robusta coffee experienced a slight decline following a 1.5-week high. The forecasts for abundant rain in Vietnam are expected to improve soil moisture levels and subsequently enhance robusta yields. The wet weather is anticipated in Vietnam’s Central Highlands, the primary coffee-growing area, potentially bolstering robusta coffee production.
Recent reports indicate that Brazil’s main arabica growing area, Minas Gerais, received only 24% of its average rainfall, further complicating yields as Brazil remains the leading global producer of arabica coffee. The country has faced dry conditions leading to lower coffee crop prospects going into the crucial harvest period.
Another supportive factor for elevated coffee prices is the decrease in inventories. The stocks of robusta coffee monitored by ICE fell to a two-month low, while arabica inventories have recently shown some recovery. Despite this, arabica stocks still hovered at a nine-and-a-quarter-month low, signaling supply tightness in the market.
As of February 11, a significant portion of Brazil’s coffee harvest has already been sold, with producers selling 88% of their 2024/25 crop, surpassing last year’s figures. However, sales of the 2025/26 crop have lagged, reflecting a tightening supply alongside concerns over future production due to adverse weather conditions.
The weather-related concerns extend beyond Brazil as Colombian coffee producers are still recovering from drought conditions. Simultaneously, Vietnam’s coffee production is significantly affected by drought, leading to projections of reduced outputs moving forward into future marketing years.
Although global coffee exports from Brazil and Vietnam have shown increases year-on-year, other reports indicate an overall decline in global coffee exports for specific periods. The USDA’s report projects growth in coffee production globally for the coming years but notes a significant decrease in Brazil’s production estimates due to adverse climatic conditions.
Volcafe has reduced its estimates for Brazil’s 2025/26 arabica production, highlighting the scale of drought impacts. Looking forward, analysts suggest a global arabica coffee supply deficit, continuing concerns over coffee prices in the coming seasons.
In summary, arabica coffee prices are bolstered by dry weather in Brazil, leading to decreased yield expectations. While robusta prices may benefit from potential rainfall in Vietnam, overall supply concerns remain significant. The combination of reduced inventories and swift sales of current crops illustrates a tight market. Projections for future production hint at ongoing deficits, suggesting persistent upward pressure on prices in the coffee market.
Original Source: www.tradingview.com
