March arabica coffee (KCH26) on Monday closed down -1.50 (-0.39%), and January ICE robusta coffee (RMF26) closed down -93 (-2.04%).
Coffee prices fell to 1-week lows on Monday and settled lower. The outlook for abundant coffee supplies is weighing on prices after the European Parliament last Wednesday approved a 1-year delay to the deforestation law, keeping coffee supplies ample. The EU regulation, known as EUDR, aims to tackle deforestation in countries whose imports into the EU include key commodities such as coffee, soybeans, and cocoa. The delay of the EUDR will allow EU countries to continue importing agricultural products from regions in Africa, Indonesia, and South America where deforestation is occurring.
Losses in coffee prices were limited due to concerns about dryness in Brazil. Somar Meteorologia reported Monday that Brazil's largest arabica coffee-growing area, Minas Gerais, received 20.4 mm of rain during the week ended November 28, or 39% of the historical average.
Shrinking ICE coffee inventories are also supportive of prices. The US tariffs imposed on US coffee imports from Brazil have led to a sharp drawdown in ICE coffee inventories. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags on November 20, and ICE robusta coffee inventories fell to a 6.75-month low of 4,342 lots on Monday. American buyers voided new contracts for Brazilian coffee purchases due to the tariffs on US imports from Brazil, thereby tightening US supplies, as about a third of America's unroasted coffee comes from Brazil. US purchases of Brazilian coffee from August through October, during which President Trump's tariffs took effect, dropped by 52% from the same period last year to 983,970 bags.
In a bearish factor, StoneX on November 19 forecast that Brazil will produce 70.7 million bags of coffee in the new 2026/27 marketing year, including 47.2 million bags of arabica, a +29% y/y increase.
Increased Vietnamese coffee supplies are bearish for prices. On November 6, the Vietnam National Statistics Office reported that Vietnam's Jan-Oct 2025 coffee exports rose +13.4% y/y to 1.31 MMT. Also, 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. In addition, 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.
Coffee prices found support after Conab, Brazil's crop forecasting agency, cut its Brazil 2025 arabica coffee crop estimate on September 4 by -4.9% to 35.2 million bags from a May forecast of 37.0 million bags. Conab also reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, from a May estimate of 55.7 million bags.
The USDA's Foreign Agriculture Service (FAS) projected on June 25 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. 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. 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.
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. For more information please view the Barchart Disclosure Policy here.
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