Coffee Prices Slip on Rain in Brazil and Increased ICE Robusta Inventories

Coffee prices today are moderately lower, with arabica coffee (KCU24) down -1.40 (-0.57%) and robusta coffee (RMU24) down -13 (-0.28%). Recent rain in Brazil has eased dryness concerns and is weighing on arabica prices. Robusta coffee is under pressure as ICE-monitored robusta coffee inventories rose to a 1-year high of 6,119 lots, signaling increased supplies.

Arabica coffee fell to a 1-week low on Monday after recent rain in Brazil alleviated drought concerns. The Minas Gerais region received 4.6 mm of rain last week, or 329% of the historical average. Last week, arabica coffee rallied to a 3-month high, and robusta coffee soared to a record high due to concerns that drier-than-normal conditions could adversely affect Brazil’s and Vietnam’s coffee crops.

Robusta coffee prices are underpinned by fears that excessive dryness in Vietnam will damage coffee crops and curb future global robusta production. Coffee trader Volcafe reported that Vietnam’s 2024/25 robusta coffee crop may only be 24 million bags, the lowest in 13 years, as poor rainfall in Vietnam has caused “irreversible damage” to coffee blossoms. Volcafe also projects a global robusta deficit of 4.6 million bags in 2024/25, a smaller deficit than the 9-million-bag deficit seen in 2023/24 but the fourth consecutive year of robusta bean deficits.

Smaller coffee supplies from Vietnam, the world’s largest robusta coffee producer, are bullish for prices. The General Department of Vietnam Customs reported that Vietnam’s June coffee exports fell -11.5% m/m and -50.4% y/y to 70,202 MT, the smallest amount of coffee exports for the month of June in 13 years.

A bearish factor for coffee prices was last Thursday’s report from Cecafe that showed Brazil’s 2023/24 coffee exports rose +33% y/y to a record 47.3 million bags. Coffee harvest pressures in Brazil are negative for coffee prices, as Safras & Mercado reported that Brazil’s 2024/25 coffee harvest was 66% completed as of July 9, faster than 59% last year at the same time and faster than the 5-year average of 62%.

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