Arabica Coffee Finishes Higher As Rain Chances Slip For Brazil’s Minas Gerais – CoffeeTalk

Coffee prices on Wednesday settled mixed, with arabica coffee (KCZ24) closing up +1.30 (+0.51%) and robusta coffee (RMX24) closing down -50 (-1.02%). Short covering emerged in coffee futures, with arabica climbing into positive territory after updated weather forecasts reduced the chance of rain this weekend in Minas Gerais, Brazil’s prominent arabica coffee growing region. Coffee prices initially moved lower on expectations for rain in Brazil and from weakness in the Brazilian real (^USDBRL), encouraging export selling from Brazil’s coffee producers.

Excessive dryness in Brazil may curb coffee yields and is a bullish price factor. Rainfall in Brazil has consistently been below average since April, damaging coffee trees during the all-important flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop. Somar Meteorologia reported that Brazil’s Minas Gerais region received 33.4 mm of rain over the past week, or 99% of the historical average. Minas Gerais accounts for about 30% of Brazil’s arabica crop.

Tightness in coffee inventories is limiting losses in coffee prices. ICE-monitored arabica coffee inventories fell to a 4-1-4 month low of 795,874 bags on October 3, and ICE-monitored robusta coffee inventories fell to a 5-month low of 4,054 lots Wednesday. Coffee inventories had recently recovered as ICE-monitored arabica coffee inventories rose to a 1-1/2 year high of 858,474 bags on September 12, up from the 24-year low of 224,066 bags posted in November 2023.

A negative factor for coffee was last Monday’s report from the International Coffee Organization (ICO) that global coffee exports rose +6.5% y/y in August to 10.92 million bags and that global exports during Oct-Aug rose +9.9% y/y to 125.67 million bags. Brazil’s green coffee exports rose +34% y/y to 4.1 million bags, and its 2023/24 coffee exports rose +33% y/y to a record 47.3 million bags.

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