Current Trends in Coffee Prices: Insights for Entrepreneurs
The coffee market is a dynamic landscape influenced by various global factors. This article provides an overview of recent trends in coffee prices, particularly focusing on the arabica and robusta varieties, as well as essential data for entrepreneurs involved in coffee export trading.
Recent Market Performance
Closing Prices
On Tuesday, the December arabica coffee contract (KCZ25) closed down by 3.05 cents, or 0.79%, while the November ICE robusta coffee contract (RMX25) fell by 59 cents, or 1.33%. Despite an initial surge, coffee prices retreated, marking a shift from recent highs.
Reasons for the Decline
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Dollar Strength: The strength of the U.S. dollar prompted profit-taking and long liquidation in coffee futures, contributing to the falling prices.
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Market Sentiment: Early optimism was overshadowed by concerns surrounding crop conditions in Brazil, particularly due to excessive dryness in key coffee-growing areas.
Importance of Weather
Reports from Somar Meteorologia indicated that Brazil’s largest arabica-growing region, Minas Gerais, received no rain during the week ending September 6, raising concerns about crop viability ahead of the critical flowering period.
Supply Dynamics
Inventory Levels
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ICE Coffee Inventories: Arabica coffee inventories monitored by ICE fell to a 16-month low of 685,945 bags, while robusta inventories dropped to a 1.5-month low of 6,638 lots.
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Impact of Reduced Exports: The International Coffee Organization (ICO) reported a year-over-year decline in global coffee exports for July and cumulative October to July exports, indicating a tightening supply situation.
Institutional Reports
Brazil’s crop forecasting agency, Conab, adjusted its estimates for the 2025 arabica coffee crop down by 4.9% to 35.2 million bags, further supporting price dynamics.
Global Supply Chain Challenges
Tariff Implications
Recent tariffs on U.S. imports of Brazilian coffee beans (50%) are tightening supplies in the U.S. market. American buyers have reportedly been avoiding new contracts, exacerbating the supply challenges.
Harvest Efficiencies
As of September 5, Brazil’s Cooxupe coffee co-op reported a 97% completion rate for its harvest. Safras & Mercado’s findings indicate that Brazil’s coffee harvest is ahead of last year’s pace, yet export levels are down significantly.
International Dynamics
Vietnam’s Production Challenges
Vietnam’s coffee production is projected to drop by 20% year-on-year due to drought conditions, with the government cutting its coffee production estimates for the upcoming years.
Forecasts for Future Production
The USDA’s Foreign Agriculture Service (FAS) expects a 2.5% increase in world coffee production for the 2025/26 crop year, albeit with a decrease in arabica production. The FAS predicts that Brazil will see slight production increases while Vietnam’s output is set to rise significantly.
Arabica Coffee Deficits
Volcafe forecasts a global arabica coffee deficit of 8.5 million bags in 2025/26, marking the fifth consecutive year of deficits, reinforcing the overall bullish sentiment for coffee prices in the medium to long term.
Conclusion
For coffee entrepreneurs, understanding these market dynamics is vital for making informed trading decisions. By staying updated on factors influencing supply and demand—such as weather patterns, inventory levels, and trade tariffs—traders can better navigate the complexities of the coffee market.
Additional Resources
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On the date of publication, Rich Asplund did not hold any positions in the mentioned securities. This article is for informational purposes only. For more information, please view the Barchart Disclosure Policy.
