FX.co ★ Arabica Coffee Futures at 2-Week High

Arabica coffee futures have surged to approximately $3.51 per pound, reaching their highest point since mid-December. This rise is driven by diminishing stocks and unfavorable weather conditions in Brazil, the leading coffee producer. As of December 29, ICE-certified Arabica stocks totaled 456,477 bags, a notable decrease from 991,080 bags the previous year. Brazil is experiencing below-average rainfall accompanied by an intense heatwave, heightening apprehensions about crop yields. Market dynamics were further influenced by flooding in Indonesia, which has impacted roughly one-third of Arabica farms in northern Sumatra. The Association of Indonesian Coffee Exporters and Industry anticipates that this could reduce exports for the 2025-26 period by as much as 15%. Coffee prices are projected to climb nearly 10% in 2025, characterizing the year as one of the most unpredictable and complex in recent history. This volatility stems from erratic weather patterns, dwindling stocks, production challenges in Brazil and other major producers, and the imposition of a 50% tariff by the United States on Brazilian coffee imports.