Coffee Prices Drop Amid Increased Supply Projections

Commodity investors are wary as coffee prices slide due to forecasts of higher global coffee supplies, impacting major companies like Starbucks and Hershey amid demand concerns. The outlook remains negative as production estimates rise from key exporters.

Date: 10-05-2025

AI Rating: 4

Market Overview: Today, both arabica and robusta coffee prices saw declines, indicating a bearish trend in the coffee market. The USDA's forecast for an increase in coffee production in Honduras and Brazil, coupled with rising inventory levels, contributes to this downward pressure.

Supply Factors: The USDA projects Honduran coffee production to rise by 5.1% to 5.8 million bags for the 2025/26 season. In Brazil, Conab's new estimates have increased production expectations significantly, which is unambiguously bearish for current prices. Specifically, Brazil's 2025 production estimate increased to 55.7 million bags from a prior forecast of 51.81 million bags.

Demand Concerns: On the demand side, major importers including Starbucks, Hershey, and Mondelez have expressed concerns about the impact of a 10% baseline tariff on coffee imports, which is expected to place additional strain on sales volumes. This situation is causing investors to reassess their positions on stocks linked to the coffee industry.

Production and Weather Conditions: A lack of rainfall in key producing regions of Brazil is also impacting pricing dynamics. Despite forecasts of higher production, dry weather is expected to result in suppressed yields for the 2025/26 crop year, creating uncertainty about the sustainability of production increases in the long run.

Conclusion: Overall, the current analysis suggests a bearish outlook for coffee prices, influenced heavily by the factors outlined, including supply increases and demand contractions. Investors in the commodities and coffee sectors should remain cautious, considering both current market dynamics and broader economic signals that might influence consumer demand patterns moving forward.

Stocks: SBUX HSY MDLZ