Cafe Central: An In-Depth Look at Coffee Futures
Strengthening Brazilian Real Increases Cost of Coffee
Stay ahead of the game with our coffee futures analysis on Plus500! Today, the July Arabica coffee (KCN25) is up +0.35 (+0.10%), while July ICE Robusta coffee (RMN25) has climbed +3 (+0.07%).
The slight increase in coffee prices is due to the strengthening Brazilian real, encouraging short covering in coffee futures. The real recently reached an 8-month high against the dollar, discouraging export selling from Brazilian producers.
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Let's take a closer look at the Brazilian coffee scene and its impact on global prices. Brazil's Cooxupe coffee co-op reported the coffee harvest to be 13.7% complete, compared to 13.6% at the same time last year. Despite recent above-normal rainfall, which has eased concerns about dryness in the growing regions, Brazil's harvest pressures are capping the upside in coffee prices.
Brazil's 2025/26 coffee harvest was 28% complete as of June 4, just above the five-year average for the same time of year, according to Safras & Mercado. Coffee prices have been under pressure over the past five weeks, with Arabica coffee reaching a 2-month low and Robusta dropping to a 7-1/4 month low due to concerns about higher production and ample supplies.
Analysts predict an increase in ICE coffee inventories to be a further drag on prices. ICE-monitored robusta inventories rose to an 8-3/4 month high of 5,438 lots on May 30, and ICE-monitored arabica inventory reached a 4-1/4 month high of 892,468 bags on May 27.
Demand concerns are also impacting coffee prices, with several global commodity importers, such as Starbucks, Hershey, and Mondelez International, stating that the US's 10% tariff would raise prices and put further pressure on sales volumes.
However, smaller coffee exports from Brazil could provide a boost to prices. In May, Cecafe reported that Brazil's April green coffee exports fell -28% year-over-year (y/y) to 3.05 million bags, and Jan-Apr coffee exports declined -15.5% y/y to 13.186 million bags.
Robusta coffee is receiving support from reduced robusta production, particularly in Vietnam. Due to a drought, Vietnam's coffee production for the 2023/24 crop year dropped -20% to 1.472 MMT, the smallest crop in four years. Vietnam exported 1.35 MMT of coffee in 2024, down -17.1% y/y, and the country's Jan-May exports for 2025 are down -1.8% y/y to 813,000 MT.
On the other hand, analysts anticipate that Vietnam's 2025/26 coffee crop will climb +7% y/y to a 4-year high of 30 million bags. The USDA's biannual report on December 18 projected that world coffee production in 2024/25 will increase +4.0% y/y to 174.855 million bags, with a +1.5% increase in arabica production to 97.845 million bags and a +7.5% increase in robusta production to 77.01 million bags.
The USDA's report forecasts ending stocks to fall by -6.6% to a 25-year low of 20.867 million bags from 22.347 million bags in 2023/24, creating a potential supply-demand imbalance.
In summary, the global coffee market is witnessing an increase in production, rising demand, and economic factors. While these factors may bring some volatility to the market, opportunities could arise for traders to benefit from price swings. Stay updated on coffee futures with Plus500!
💡Did you know? The global coffee market is forecasted to grow from $269.27 billion in 2024 to $369.46 billion by 2030, driven primarily by growing consumer preferences for premium coffees and expanding coffee culture in emerging markets. (Source: The Business Research Company)
[1] International Coffee Organization (ICO) - https://www.ico.org/[2] The Business Research Company - https://www.thebusinessresearchcompany.com/[3] United States Department of Agriculture (USDA) - https://www.usda.gov/
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