Dry Conditions In Brazil Underpin Coffee Prices – CoffeeTalk

Coffee prices in May rose by 2.54% due to below-normal rainfall in Brazil, with the largest arabica coffee growing area of Minas Gerais receiving 1.1mm of rainfall. The dollar index also fell to a 4-3/4 month low on Tuesday. A recovery in coffee inventories was negative for prices, with ICE-monitored arabica coffee inventories rising to a 1-week high of 803,032 bags and robusta coffee inventories rising to a 1-month high of 4,356 lots. Marex Solutions predicted that the global coffee surplus in the 2025/26 season would widen to 1.2 million bags from +200,000 bags in the 2024/25 season.

A bearish factor for robusta coffee was Vietnam’s General Statistics Office report that showed Vietnam’s February coffee exports rose 6.6% y/y to 169,000 MT. Brazil’s government crop forecasting agency, Conab, forecasted that Brazil’s 2025/26 coffee crop would fall -4.4% y/y to a 3-year low of 51.81 million bags. The impact of dry El Nino weather last year may lead to longer-term coffee crop damage in South and Central America, as Brazil has consistently been below average since last April, damaging coffee trees during the flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop.

Robusta coffee prices are underpinned by reduced robusta production, with Vietnam’s coffee production dropping by -20% to 1.472 MMT due to drought. 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. The FAS also projected Brazil’s 2024/25 coffee production at 66.4 MMT, below its previous forecast of 69.9 MMT.

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. 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.

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