September arabica coffee (KCU25) Tuesday closed up +4.40 (+1.51%), and September ICE robusta coffee (RMU25) closed up +102 (+3.20%).
Coffee prices erased early losses on Tuesday and settled sharply higher on concern about frost in Brazil. Meteorologist Climatempo forecasted Tuesday that a cold front will advance through Brazil’s coffee-growing regions later this week, potentially bringing crop-damaging frost to the area.
Coffee prices initially moved lower on Tuesday, with arabica posting a 1-week low, Sep robusta reaching a contract low, and nearest-futures (N25) robusta hitting a 1.25-year low. Coffee harvest pressures from Brazil are weighing on coffee prices. Last Friday, Safras & Mercado reported that Brazil’s overall 2025/26 coffee harvest was 77% complete as of July 16, ahead of the comparable level of 74% last year and the 5-year average of 69%. The breakdown showed that 93% of the robusta harvest and 67% of the arabica harvest were complete as of July 9. In related news, Brazil’s Cooxupe coffee co-op announced today that its harvest among its members was 59% complete as of July 18. Cooxupe is Brazil’s largest coffee cooperative and Brazil’s largest exporter group.
Robusta coffee prices are also under pressure from an increase in ICE-monitored inventories as robusta coffee inventories on Tuesday rose to an 11.5-month high of 6,401 lots. Conversely, ICE-monitored arabica coffee inventories fell to a 3-month low of 807,856 bags on Tuesday.
An excessive short position by funds in robusta coffee could exacerbate any short-covering rally in robusta coffee futures. ICE Futures Europe reported last Friday that funds boosted their net-short positions in ICE robusta futures by 1,163 to 1,294 short positions in the week ended July 15, the most in two years.
Excessive dryness in Brazil is a supportive factor for coffee prices. Somar Meteorologia reported Monday that Brazil’s largest arabica coffee-growing area, Minas Gerais, received no rain during the week ended July 19.
Smaller coffee exports from Brazil are positive for prices after Cecafe reported last Wednesday that Brazil’s total Jun green coffee exports fell -31% y/y to 2.3 million bags, with arabica exports down -27% y/y to 1.8 million bags and robusta exports down -42% y/y to 476,334 bags.
Arabica coffee prices received support from President Trump’s recent announcement that he would impose 50% tariffs on US imports from Brazil, effective August 1. That threat caused concern that coffee supplies could be disrupted from Brazil, the world’s largest producer of arabica coffee.
Coffee prices have retreated over the past two months on the outlook for abundant coffee supplies. On June 25, the USDA’s Foreign Agricultural Service (FAS) forecasted that Brazil’s 2025/26 coffee production will increase by +0.5% y/y to 65 million bags and that Vietnam’s 2025/26 coffee output will rise by 6.9% y/y to a 4-year high of 31 million bags. Brazil is the world’s largest producer of arabica coffee, and Vietnam is the world’s largest producer of robusta coffee.
Due to drought, Vietnam’s coffee production in the 2023/24 crop year decreased by -20% y/y to 1.472 MMT, the smallest crop in four years. Also, Vietnam’s General Statistics Office reported that 2024 Vietnam coffee exports fell by -17.1% y/y to 1.35 MMT. Additionally, the Vietnam Coffee and Cocoa Association reduced its 2024/25 Vietnam coffee production estimate to 26.5 million bags on March 12, down from a December estimate of 28 million bags. By contrast, the Vietnam National Statistics Office reported on July 7 that Vietnam’s Jan-Jun 2025 coffee exports were up +4.1% y/y to 943,000 MT.
The USDA’s biannual report, released on June 25, was bearish for coffee prices. The USDA’s Foreign Agriculture Service (FAS) projected that world coffee production in 2025/26 will increase by +2.5% y/y to a record 178.68 million bags, with a -1.7% decrease in arabica production to 97.022 million bags and a +7.9% increase in robusta production to 81.658 million bags. The USDA’s FAS forecasts that 2025/26 ending stocks will climb by +4.9% to 22.819 million bags from 21.752 million bags in 2024/25.
For the 2025/26 marketing year, 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.
