Global Weather Risks Underpin Coffee Prices

December arabica espresso (KCZ25) on Wednesday closed up +8.35 (+2.06%), and January ICE robusta espresso (RMF26) closed up +5 (+0.11%).

Espresso costs moved greater on Wednesday, with arabica up sharply at a 1.5-week excessive.  Issues that antagonistic climate occasions worldwide will disrupt international espresso manufacturing are underpinning espresso costs.  Somar Meteorologia reported Monday that Brazil’s largest arabica coffee-growing space, Minas Gerais, obtained solely 33.4 mm of rain through the week ended October 31, or 75% of the historic common.  That adopted only one% of regular rain within the earlier week.  Additionally, Storm Kalmaegi is forecast to make landfall in southern Vietnam on Thursday or Friday and will trigger harm to robusta crops in Vietnam’s coffee-growing areas.

Don’t Miss a Day: From crude oil to espresso, enroll free for Barchart’s best-in-class commodity evaluation.

Shrinking ICE espresso inventories are additionally supportive of costs.  The 50% tariffs imposed on US imports from Brazil have led to a pointy drawdown in ICE espresso inventories.  ICE-monitored arabica inventories fell to a 1.75-year low of 429,770 luggage on Wednesday, and ICE robusta espresso inventories fell to a 3.5-month low of 6,036 tons.  American consumers are voiding new contracts for Brazilian espresso purchases as a result of 50% tariffs on US imports from Brazil, thereby tightening US provides, as a few third of America’s unroasted espresso comes from Brazil.  antagonistic glo

Espresso costs garnered help after the Nationwide Oceanic and Atmospheric Administration (NOAA) on September 16  elevated the chance to 71% of a La Niña climate system within the southern hemisphere from October to December, which might deliver extreme dry climate to Brazil and hurt the 2026/27 espresso crop.  Brazil is the world’s largest producer of arabica espresso.

Arabica espresso costs are being undercut by hypothesis that the US might quickly raise its 50% tariff on Brazilian espresso.  Final Monday, Brazil’s President Luiz Inacio Lula da Silva stated he had a “surprisingly good” assembly with President Trump and stated there might be a “definitive answer” on US-Brazil commerce inside days.

Robusta espresso is below stress from elevated Vietnamese provides.  The Vietnam Nationwide Statistics Workplace reported on October 13 that Vietnam’s Jan-Sep 2025 espresso exports rose +10.9% y/y to 1.230 MMT.  Additionally, Vietnam’s 2025/26 espresso manufacturing is projected to climb +6% y/y to 1.76 MMT, or 29.4 million luggage, a 4-year excessive.  As well as, the Vietnam Espresso and Cocoa Affiliation (Vicofa) stated on October 24 that Vietnam’s espresso output in 2025/26 will probably be 10% greater than the earlier crop yr if climate situations stay favorable.   Vietnam is the world’s largest producer of robusta espresso.  

Bigger espresso exports are bearish for costs after the Worldwide Espresso Group (ICO) reported on October 6 that international espresso exports for the present advertising and marketing yr (Oct-Aug) rose +0.2% y/y to 127.92 million luggage, indicating satisfactory exports and provides.

Espresso costs discovered help after Conab, Brazil’s crop forecasting company, minimize its Brazil 2025 arabica espresso crop estimate on September 4 by -4.9% to 35.2 million luggage from a Might forecast of 37.0 million luggage.  Conab additionally lowered its whole Brazil 2025 espresso manufacturing estimate by 0.9% to 55.2 million luggage, from a Might estimate of 55.7 million luggage.

The USDA’s International Agriculture Service (FAS) projected on June 25 that world espresso manufacturing in 2025/26 will enhance by +2.5% y/y to a report 178.68 million luggage, with a -1.7% lower in arabica manufacturing to 97.022 million luggage and a +7.9% enhance in robusta manufacturing to 81.658 million luggage.  FAS forecasted that Brazil’s 2025/26 espresso manufacturing will enhance by +0.5% y/y to 65 million luggage and that Vietnam’s 2025/26 espresso output will rise by 6.9% y/y to a 4-year excessive of 31 million luggage.  FAS forecasts that 2025/26 ending shares will climb by +4.9% to 22.819 million luggage from 21.752 million luggage in 2024/25. 

On the date of publication,

Wealthy Asplund

didn’t have (both instantly or not directly) positions in any of the securities talked about on this article. All info and knowledge on this article is solely for informational functions.

For extra info please view the Barchart Disclosure Coverage

right here.

Extra information from Barchart

The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.