Coffee prices have surged to their highest level in a month, fuelled by growing concerns over Brazilian harvests. Recent limited rainfall in the country has significantly dampened the production outlook for Arabica beans.
Rabobank, a key financial institution providing analysis for agricultural commodity markets, indicated in a report last Tuesday that Brazil's Arabica output for the 2025/26 season is projected to decline by 13.6% year-on-year to 38.1 million bags. The lingering effects of last year's El Niño continue to be a factor. However, Robusta production is anticipated to reach a record high of 24.7 million bags, marking a 7.3% year-on-year increase.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appAdding to the upward pressure is the notable weakening of the US dollar. The dollar is experiencing broad-based losses, including against the Brazilian real, which is curtailing export prospects. The latest available data from Cecafe for March reveals that Brazil's green coffee exports fell by 26% year-on-year to just under 3 million bags.
Interestingly, recent trading activity shows a marked reduction in open interest and net positions in coffee futures. This decrease is primarily driven by the unwinding of long positions. While liquidity levels are still far from the extremely thin conditions seen in the cocoa market, further declines in open interest, even through the liquidation of long positions, could potentially propel coffee prices higher.
Long positions in coffee are notably decreasing, while short positions remain at extremely low levels. Source: Bloomberg Finance LP, XTB
Coffee prices are currently testing the 400 cents per pound mark, their highest point in a month. A clear correlation between the Brazilian real and coffee prices has been evident since December. With tight supply conditions, reduced export prospects are providing a strong upward impetus for coffee. Conversely, there is a discernible exit of speculative traders from the market. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
