Impact of Brazilian Rain Forecasts on Coffee Futures Prices
Forecasts of rain in Brazil have caused notable declines in coffee futures prices, with both arabica and robusta experiencing losses. Concurrently, Vietnam’s increased coffee exports and ongoing supply concerns further complicate the market situation. Diminished inventories and adverse weather patterns continue to impact pricing structures, indicating a challenging environment for coffee producers.
Recent forecasts indicating rain in Brazil have led to significant declines in coffee futures. As of today, May arabica coffee futures are down 5.49%, while robusta coffee futures have decreased by 3.44%. Somar Meteorologia disclosed that Brazil will transition from dry, hot weather later this week to several days of rainfall next week, potentially alleviating current dry conditions.
In addition to Brazilian rain outlooks, robusta coffee prices are pressured as Vietnam reported a 6.6% year-on-year increase in February exports, amounting to 169,000 metric tons. Forecasts suggest continuing rain in Vietnam’s Central Highlands, further influencing coffee prices negatively.
Reports indicate that Brazil’s Minas Gerais region—the largest arabica-growing area—received 11.4 mm of rainfall, amounting to 24% of its historical average. This report was slightly delayed due to the Brazilian Carnival. As the leading arabica coffee producer, Brazil’s climatic conditions are pivotal for global markets.
Dwindling inventories provide additional support for coffee prices. As of last Friday, ICE-monitored robusta inventories declined to a two-month low of 4,247 lots, while arabica inventories fell to a nine-and-a-quarter-month low. However, arabica stocks have rebounded to a two-week high of 809,128 bags.
As producers have sold a larger proportion of their coffee harvest this year compared to previous years, supply fears have been heightened. As reported, 88% of Brazil’s 2024/25 coffee harvest was sold by February 11, exceeding the previous year’s rate. Meanwhile, only 13% of the 2025/26 crop has been sold, which is notably lower than the historical average.
Concerns regarding supply continue, as Brazil’s January green coffee exports decreased by 1.6% year-on-year to 3.98 million bags. Additionally, forecasts suggest a drop in Brazil’s future coffee production, with Conab estimating a 4.4% reduction to a three-year low of 51.81 million bags for the 2025/26 crop, indicating a tighter market ahead.
The adverse effects of El Nino weather patterns have exacerbated drought conditions in Brazil and Colombia, affecting coffee crops significantly. Brazil is currently experiencing its driest weather since 1981, contributing to reduced flowering prospects for upcoming coffee crops.
Robusta coffee prices are being supported by diminished production levels, particularly in Vietnam, where the 2023/24 crop year witnessed a downturn of 20%. ASEAN statistics indicated a reduction in expected exports, although revised estimates for future production have shown slight increases.
Global coffee exports dynamics are presenting bearish signals for coffee prices. Early projections by the USDA indicate an overall boost in production, with arabica and robusta outputs expected to increase in the 2024/25 season. Nonetheless, estimates suggest a decline in Brazil’s overall coffee production, compounding market concerns.
Volcafe has adjusted its projections for Brazil’s 2025/26 arabica production down to 34.4 million bags, highlighting significant drought consequences. This report anticipates a global arabica deficit extending into the marketing year, raising concerns about coffee supply reliability in the near future.
In summary, the anticipated rain in Brazil has triggered a long liquidation in coffee futures, leading to significant price drops. Concurrent reports from Vietnam highlight increased coffee exports while forecasts of adverse weather conditions continue to prompt supply fears. Additionally, decreasing inventories and shifted production estimates for Brazil create a complex landscape for coffee pricing. The coffee market appears poised to navigate through varied influences amid evolving climatic conditions and trade dynamics.
Original Source: www.tradingview.com
