Coffee Prices Retreat on the Outlook for Ample Global Supplies

March arabica espresso (KCH26) right this moment is down -5.30 (-1.38%), and January ICE robusta espresso (RMF26) is down -47 (-1.03%).

Espresso costs are sliding right this moment after the European Parliament authorized a 1-year delay to the deforestation regulation, which ought to hold international espresso provides ample.  The EU regulation, often known as EUDR, goals to sort out deforestation in nations whose imports into the EU embrace key commodities resembling soybeans, espresso, and cocoa.  The delay of the regulation will permit EU nations to proceed importing agricultural merchandise from areas in Africa, Indonesia, and South America the place deforestation is going on.  

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Losses in espresso are restricted on account of antagonistic international climate occasions that threaten to curb espresso output.  Arabica espresso has help on account of dryness issues in Brazil.  On Monday, Somar Meteorologia reported that Brazil’s largest arabica coffee-growing space, Minas Gerais, acquired 26.4 mm of rain throughout the week ended November 21, or 49% of the historic common.  Robusta espresso has help amid forecasts of heavy showers in Vietnam’s Dak Lak province, the nation’s largest coffee-growing area, which is able to additional delay the harvest.  

Shrinking ICE espresso inventories are supportive of costs.  The US tariffs imposed on US espresso 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 398,645 baggage final Thursday, and ICE robusta espresso inventories fell to a 6.25-month low of 4,911 tons right this moment.  American patrons voided new contracts for Brazilian espresso purchases because of the tariffs on US imports from Brazil, thereby tightening US provides, as a few third of America’s unroasted espresso comes from Brazil.  US purchases of Brazilian espresso from August via October, throughout which President Trump’s tariffs took impact, dropped by 52% from the identical interval final yr to 983,970 baggage.

Final Friday, arabica espresso tumbled to a 7-week low after President Trump signed an govt order late Thursday exempting Brazilian meals merchandise from tariffs, together with the 40% tariff on Brazilian espresso.

In a bearish issue, StoneX forecast final Wednesday that Brazil will produce 70.7 million baggage of espresso within the new 2026/27 advertising and marketing yr, together with 47.2 million baggage of arabica, a +29% y/y improve.

Elevated Vietnamese espresso provides are bearish for costs.  On November 6, the Vietnam Nationwide Statistics Workplace reported that Vietnam’s Jan-Oct 2025 espresso exports rose +13.4% y/y to 1.31 MMT.  Additionally, Vietnam’s 2025/26 espresso manufacturing is projected to climb +6% y/y to 1.76 MMT, or 29.4 million baggage, a 4-year excessive.  As well as, the Vietnam Espresso and Cocoa Affiliation (Vicofa) mentioned on October 24 that Vietnam’s espresso output in 2025/26 will probably be 10% increased than the earlier crop yr if climate circumstances stay favorable.   Vietnam is the world’s largest producer of robusta espresso.

Indicators of tighter international espresso provides are supportive of costs, because the Worldwide Espresso Group (ICO) on November 7 reported that international espresso exports for the present advertising and marketing yr (Oct-Sep) fell 0.3% y/y to 138.658 million baggage.

Espresso costs discovered help after Conab, Brazil’s crop forecasting company, lower its Brazil 2025 arabica espresso crop estimate on September 4 by -4.9% to 35.2 million baggage from a Could forecast of 37.0 million baggage.  Conab additionally diminished its complete Brazil 2025 espresso manufacturing estimate by 0.9% to 55.2 million baggage, from a Could estimate of 55.7 million baggage.

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

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