Coffee Prices Surge Amid Vietnam Harvest Concerns

Coffee prices soared today, driven by robusta coffee’s rise to a 1.5-week high amid fears that heavy rainfall in Vietnam will further disrupt harvesting. Vietnam, the largest robusta coffee producer, is facing significant challenges as recent floods have delayed the harvest. November exports from Vietnam plunged 47% year-on-year to 63,019 MT, while year-to-date exports fell 14% to 1.22 MMT, according to the Vietnam General Department of Customs.

Brazil’s Weather Relief Offers Temporary Respite

Recent rains in Brazil temporarily eased drought concerns, pushing coffee prices to 3.5-week lows earlier this week. Meteorological data revealed that Minas Gerais, Brazil’s largest arabica-growing region, received 182% of its average rainfall last week, alleviating fears of prolonged drought. However, the Brazilian real’s weakness against the U.S. dollar remains a bearish factor, encouraging export activity from Brazil’s producers.

Mixed Signals for Long-Term Coffee Supply

The long-term outlook remains a mix of bullish and bearish factors. Volcafe recently cut its 2025/26 Brazilian arabica production estimate to 34.4 million bags, reflecting severe drought conditions. This projection points to a global arabica deficit of 8.5 million bags, marking the fifth consecutive year of supply shortages. On the other hand, the USDA’s December report forecasts a 4% year-on-year increase in global coffee production for 2024/25, with robusta production expected to grow by 7.5%.

Robusta coffee prices continue to gain support from reduced production in Vietnam, which saw a 20% drop in 2023/24 output due to drought. The International Coffee Organization (ICO), however, highlighted a bearish trend with a record global coffee production of 178 million bags for 2023/24, resulting in a surplus of 1 million bags.

As global weather conditions and export trends evolve, the coffee market is likely to remain volatile, with supply disruptions and changing consumption patterns playing pivotal roles in price dynamics.

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