Arabica and Robusta Coffee Prices Fall as Brazilian Supply Increases
Today, Arabica and Robusta coffee prices took a dip, reversing some of their recent gains. Arabica prices fell by 2.68% to 242.58, while Robusta prices dropped 1.10% to 4,569.00. This marks a significant shift from the previous trading session, where both varieties saw higher prices. Comparing to last month, Arabica has shown some volatility but remains up by 1.46%, while Robusta is still up by 1.96% over the same period.
The drop in prices today is largely attributed to an increase in supply from Brazil. Recent improvements in weather conditions have bolstered crop yields, alleviating some of the supply concerns that had been driving prices higher in previous months. Additionally, the Brazilian real (BRL) has strengthened, with the USD/BRL rising by 1.92%, making Brazilian coffee more expensive for foreign buyers, thereby reducing international demand. As a result, traders are pricing in the effects of a stronger Brazilian currency along with better crop forecasts.
Arabica Coffee Prices
Arabica prices have been volatile in recent weeks but are still holding higher than earlier in the year, despite today’s drop to 242.58. Compared to yesterday’s price of 249.25, today’s decline reflects a shift in sentiment as traders react to Brazil’s improved coffee outlook. The country’s coffee production has seen a boost thanks to better-than-expected weather, particularly in key growing regions. Moreover, increased rainfall has improved water availability for irrigation, supporting larger yields.
While Arabica remains 1.46% higher than a month ago, the short-term dip is a reflection of the changing dynamics in the market. The stronger USD/BRL exchange rate is also impacting prices. The Brazilian real’s recent appreciation is making Brazilian exports more expensive on the global market, further easing demand for Arabica coffee.
Robusta Coffee Prices
Similarly, Robusta coffee prices have seen a decline today, settling at 4,569.00, down 1.10% from yesterday’s price of 4,620.00. Over the last month, however, Robusta prices have risen by 1.96%, indicating that overall market conditions remain favorable despite today’s pullback. Robust demand for Robusta from Asia, particularly for use in instant coffee, continues to provide support for prices, though the immediate increase in Brazilian supply has softened the upward momentum.
The recent price drop is also a reflection of the larger-than-expected harvest in Brazil. With improved weather and favorable growing conditions, Brazilian farmers are seeing stronger yields for both Arabica and Robusta varieties. This has reduced the upward pressure on prices that had been driven by earlier concerns about supply shortages.
Currency Impact
The Brazilian real’s strengthening has added another layer of complexity to coffee pricing. With the USD/BRL rising to 5.591, the stronger currency is reducing international competitiveness for Brazilian coffee. As the real gains strength, export prices increase, pushing some buyers to seek alternatives or delay purchases, contributing to today’s price declines.
The combined effects of higher supply and a stronger currency are creating headwinds for coffee prices in the short term, even as global demand remains robust.
