Coffee Prices Consolidated This Week's Gains

July arabica coffee (KCN25) Friday closed up +0.75 (+0.19%), and July ICE robusta coffee (RMN25) closed up +165 (+3.22%).Coffee prices on Friday settled higher but remained below Tuesday's highs. On Tuesday, arabica coffee rose to a 2-1/2 month high, and robusta posted a 5-week high on concern about a smaller Brazilian coffee crop. Last Tuesday, Rabobank predicted Brazil's 2025/26 arabica coffee crop would fall -13.6% y/y to 38.1 million bags, citing dry weather in key arabica-growing areas that significantly reduced flowering of coffee trees.Smaller robusta coffee supplies from Vietnam, the world's largest robusta producer, are underpinning robusta prices. Last Friday, the Vietnam Customs Department reported that Vietnam's Jan-March coffee exports were down -15.3% y/y to 495,780 MT.Supply fears are supportive of coffee prices. On April 9, Cecafe reported that Brazil's March green coffee exports fell -26% y/y to 2.95 million bags. On January 28, Conab, Brazil's government crop forecasting agency, forecasted that Brazil's 2025/26 coffee crop would fall -4.4% y/y to a 3-year low of 51.81 million bags. Conab also cut its 2024 Brazil coffee crop estimate by -1.1% to 54.2 million bags from a September estimate of 54.8 million bags. On the negative side is the recent above-normal rain in Brazil that has boosted soil moisture levels and supported coffee crop growth. Somar Meteorologia reported Monday that Brazil's biggest arabica coffee growing area of Minas Gerais, received 38.7 mm of rain in the week ended April 19, or 490% of the historical average. Demand concerns are also bearish for coffee prices. Several global commodity importers, including Starbucks, Hershey, and Mondelez International, said the US's baseline 10% tariff on imports would raise prices and further pressure sales volumes.The current coffee inventory situation is mixed. On Wednesday, ICE-monitored robusta coffee inventories fell to a 4-month low of 4,225 lots. Conversely, ICE-monitored arabica coffee inventories rose to a 2-1/2 month high Friday of 828,119 bags.Robusta coffee has support from reduced robusta production. Due to drought, Vietnam's coffee production in the 2023/24 crop year dropped 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. 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. Converesely, Rabobank predicted that Brazil's 2025/26 robusta coffee crop would climb +7.3% y/y to a record 24.7 million bags.News of larger global coffee exports is bearish for prices. Conab reported on February 4 that Brazil's 2024 coffee exports rose +28.8% y/y to a record 50.5 million bags. However, ICO reported on February 6 that Dec global coffee exports fell -12.4% y/y to 10.73 million bags, and Oct-Dec global coffee exports fell -0.8% y/y to 32.25 million bags.The USDA's biannual report on December 18 was mixed for coffee prices. The USDA's Foreign Agriculture Service (FAS) projected that world coffee production in 2024/25 will increase +4.0% y/y to 174.855 million bags, with a +1.5% increase in arabica production to 97.845 million bags and a +7.5% increase in robusta production to 77.01 million bags. The USDA's FAS forecasts that 2024/25 ending stocks will fall by -6.6% to a 25-year low of 20.867 million bags from 22.347 million bags in 2023/24. Separately, the USDA's FAS on November 22 projected Brazil's 2024/25 coffee production at 66.4 MMT, below its previous forecast of 69.9 MMT. The USDA's FAS projects Brazil's coffee inventories at 1.2 million bags at the end of the 2024/25 season in June, down -26% y/y.For the 2025/26 marketing year, Volcafe on December 17 cut its 2025/26 Brazil arabica coffee production estimate to 34.4 million bags, down by about 11 million bags from a September estimate after a crop tour revealed the severity of an extended drought in Brazil. 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. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.