Brazil's Low Rainfall Leads To More Coffee Price Instability – CoffeeTalk

Arabica coffee prices have been boosted by lackluster rainfall in Brazil, which has caused short covering in coffee futures. The country’s biggest arabica coffee growing area of Minas Gerais received 1.5 mm of rain in the week ended April 26, or 21% of the historical average. Last 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. 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. 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, with Cecafe reporting that Brazil’s March green coffee exports fell -26% y/y to 2.95 million bags. 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.

Demand concerns are bearish for coffee prices, as 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, with ICE-monitored robusta coffee inventories falling to a 4-month low of 4,225 lots and ICE-monitored arabica coffee inventories rising to a 2-1/2 month high last Friday of 828,119 bags.

The USDA’s biannual report on December 18 was mixed for coffee prices, with the FAS projecting a +4.0% y/y increase in world coffee production in 2024/25, with a +1.5% increase in arabica production and a +7.5% increase in robusta production. Volcafe 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.

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