With Brazil’s government crop forecasting agency lowering its 2024 coffee crop estimate by 1.1% to 54.2 million bags from 54.8 million, the price for March arabica coffee climbed +1.39% to a one-month high, while March robusta surged +3.05%, hitting a six-week peak, according to Nasdaq.
Arabica coffee prices also found support from unfavorable weather in Brazil. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-growing region, received only 29.6 mm of rainfall last week, only 53% of its historical average.
Meanwhile, robusta prices were bolstered by concerns about Vietnam-sourced coffee as the country prepares for the Lunar New Year, a period that typically disrupts bean availability.
However, robust export numbers have weighed on prices. Cecafe reported that Brazil’s 2024 arabica coffee exports jumped +20% y/y to a record 37 million bags, while robusta exports soared +98% y/y to a record 9.4 million bags.
ICE-monitored arabica coffee inventories rose to a 2.5-year high of 993,562 bags on January 6, while robusta inventories reached a 3.5-month high.
Despite these bearish factors, coffee prices have remained elevated due to forecasts of smaller Brazilian coffee crops.
Volcafe recently cut its 2025/26 Brazil arabica production estimate by 11 million bags to 34.4 million bags, citing the effects of a prolonged drought.
The revision points to a global arabica deficit of 8.5 million bags for 2025/26, widening from the 5.5 million bag deficit projected for 2024/25.
Dry conditions driven by El Niño have significantly impacted coffee-growing regions in South and Central America. Brazil has faced its driest weather since 1981, damaging coffee trees during the critical flowering stage and reducing crop prospects. Colombia, the second-largest arabica producer, is also recovering from drought. In Vietnam, drought led to a -20% drop in robusta production in the 2023/24 season, the smallest crop in four years.
Global export trends present a mixed picture.
The International Coffee Organization (ICO) reported that global coffee exports for the 2023/24 season rose +11.7% y/y to 137.27 million bags. However, the ICO also noted a global coffee surplus of 1 million bags as production outpaced consumption.
The USDA’s December report offered a nuanced outlook. It projected world coffee production for 2024/25 to rise +4% y/y to 174.855 million bags, with a +1.5% increase in arabica production and a +7.5% rise in robusta production. However, ending stocks are expected to fall by -6.6% to a 24-year low of 20.867 million bags.
Looking at the historical context of coffee prices, the commodity has seen several periods of dramatic price fluctuations. During the rise of Brazil as a coffee powerhouse in the 19th century, coffee prices became a key factor in global trade, with the use of coffee beans as currency for infrastructure projects being one of the unique episodes in the coffee industry’s history.
Over the years, coffee prices have been influenced by factors such as weather conditions, crop failures, trade policies, and shifts in consumer demand. During the 1970s, for example, coffee prices surged due to political instability in key coffee-producing regions and the rise of consumer demand for specialty coffees.
In the early 2000s, prices slumped below USD 0.50 per pound due to oversupply, sparking a crisis for coffee farmers worldwide. However, the 2010s witnessed a rebound as growing demand from emerging markets and specialty coffee consumers drove prices upward.
In more recent times, the global coffee market has experienced periodic booms and busts, driven by supply chain disruptions, climate change, and evolving demand. Coffee prices reached record highs in the mid-2010s, with arabica prices soaring to USD 2.50 per pound in 2014, driven by concerns over a drought in Brazil.
More recently, extreme weather events linked to climate change and supply chain disruptions have led to renewed volatility in coffee prices.
Today, coffee prices continue to be a volatile commodity, with traders closely watching weather patterns in Brazil and Vietnam, two of the world’s largest coffee producers. As the global coffee market continues to grow and diversify, prices will remain a crucial factor for producers, consumers, and investors alike.