Coffee prices are currently under pressure, with robusta reaching a two-week low, driven by expectations of potential U.S. tariff cuts on non-domestic crops and optimistic supply forecasts, including StoneX's projection of a 29% year-over-year increase for Brazil's 2026/27 crop and higher Vietnamese exports and production for 2025/26. This bearish sentiment is reinforced by recent beneficial rains in Brazil. However, underlying support for prices stems from shrinking ICE arabica inventories, which are at a 1.75-year low, the impact of 50% tariffs on Brazilian imports tightening U.S. supply, and a NOAA forecast for a La Niña event potentially harming Brazil's 2026/27 crop, alongside recent downward revisions to Brazil's 2025 crop estimates by Conab.
Coffee prices are currently under pressure, with December arabica and January robusta both down, and robusta hitting a two-week low. This decline is primarily driven by expectations of potential US tariff cuts on non-domestic crops, as indicated by Treasury Secretary Bessent, and StoneX's initial forecast for Brazil's 2026/27 crop projecting a significant 29% year-over-year increase to 70.7 million bags. Further bearish sentiment stems from robust supply projections from Vietnam, with Jan-Oct 2025 exports up 13.4% year-over-year and 2025/26 production forecasted to climb 6% to a four-year high of 1.76 MMT. Recent beneficial rainfall in Brazil's Minas Gerais region, receiving 160% of its historical average, has also eased immediate dryness concerns, supporting the increased supply outlook. Conversely, several factors provide underlying support for coffee prices, mitigating deeper declines. ICE-monitored arabica inventories have fallen to a 1.75-year low of 404,930, while robusta inventories are at a 3.75-month low, exacerbated by 50% US tariffs on Brazilian imports tightening US supply. Additionally, the NOAA's 71% likelihood of a La Niña event from October to December poses a significant risk to Brazil's 2026/27 crop, potentially offsetting optimistic long-term forecasts. The supply outlook remains mixed, with Conab cutting Brazil's 2025 arabica crop estimate by 4.9% to 35.2 million bags, contrasting with the USDA FAS projection of a 2.5% increase in world coffee production for 2025/26. While FAS forecasts a 7.9% rise in robusta production, it also anticipates a 1.7% decrease in arabica production, suggesting continued divergence in market segments.
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Overall Sentiment
moderately negative
Sentiment Score
-0.40
Ticker Sentiment
