March arabica coffee (KCH26) on Wednesday closed down -1.80 (-0.52%), and January ICE robusta coffee (RMF26) closed up +42 (+1.06%).
Coffee prices on Wednesday closed mixed, with arabica coffee seeing some technical selling after the small 2-session recovery rally.
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Coffee prices are supported by widespread flooding in Indonesia, which threatens to reduce the country’s coffee exports by as much as 15% in the 2025-26 season, according to the chairman of the Association of Indonesian Coffee Exporters and Industry. The flooding has affected about a third of Indonesia’s arabica coffee farms in northern Sumatra in recent weeks, while robusta crops are less affected. Indonesia is the world’s third-largest producer of robusta.
In a bullish factor, Somar Meteorologia on Monday reported that Brazil’s largest arabica coffee-growing area, Minas Gerais, received 38.3 mm of rain during the week ended December 19, or 76% of the historical average.
Shrinking ICE coffee inventories are supportive of prices. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags on November 20, although they recovered to a 2-month high of 456,477 bags on Wednesday. ICE robusta coffee inventories fell to an 11.5-month low of 4,012 lots on December 10 but recovered to a 3-week high of 4,278 lots on Tuesday and Wednesday.
American buyers shunned Brazilian coffee purchases due to previous high tariffs on US imports from Brazil. Those US tariffs have since been cut, but US coffee inventories are still tight. US purchases of Brazilian coffee from August through October, during which President Trump’s tariffs were in effect, dropped by 52% from the same period last year to 983,970 bags.
The outlook for ample coffee supplies is weighing on prices. On December 4, Conab, Brazil’s crop forecasting agency, raised its total Brazil 2025 coffee production estimate by 2.4% to 56.54 million bags, from a September estimate of 55.20 million bags.
Robusta coffee remains under pressure amid concerns about abundant supplies. On December 5, Vietnam’s National Statistics Office reported that Vietnam’s Nov coffee exports jumped +39% y/y to 88,000 MT and that Jan-Nov coffee exports rose +14.8% y/y to 1.398 MMT.
Increased Vietnamese coffee supplies are bearish for prices. Vietnam’s 2025/26 coffee production is projected to climb +6% y/y to 1.76 MMT, or 29.4 million bags, a 4-year high. Also, the Vietnam Coffee and Cocoa Association (Vicofa) said on October 24 that Vietnam’s coffee output in 2025/26 will be 10% higher than the previous crop year if weather conditions remain favorable. Vietnam is the world’s largest producer of robusta coffee.
Signs of tighter global coffee supplies are supportive of prices, as the International Coffee Organization (ICO) on November 7 reported that global coffee exports for the current marketing year (Oct-Sep) fell -0.3% y/y to 138.658 million bags.
The USDA’s Foreign Agriculture Service (FAS) bi-annual report on Thursday projected that world coffee production in 2025/26 will increase by +2.0% y/y to a record 178.848 million bags, with a -4.7% decrease in arabica production to 95.515 million bags and a +10.9% increase in robusta production to 83.333 million bags. FAS forecasted that Brazil’s 2025/26 coffee production will decline by -3.1% y/y to 63 million bags and that Vietnam’s 2025/26 coffee output will rise by 6.2% y/y to a 4-year high of 30.8 million bags. FAS forecasts that 2025/26 ending stocks will fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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