Coffee prices in New York face pressure due to worries about supply demand.

The global coffee market is experiencing a mix of positive and negative developments, with key producers like Brazil and Vietnam seeing shifts in production and exports.

In Brazil, the Minas Gerais region experienced above-average rainfall during the week ended August 30, recording 163% of the historical average. This could potentially impact the quality and quantity of the upcoming coffee harvest. However, Brazil's crop forecasting agency, Conab, recently reduced its Brazil 2025 arabica coffee crop estimate by 4.9% to 35.2 million bags, providing some support to coffee prices.

Meanwhile, Vietnam, a significant coffee exporter, saw a 17.1% year-on-year (y/y) drop in coffee exports in 2024, totalling 1.35 MMT. This decline is attributed to lower production, with Vietnam's coffee production in the 2023/24 crop year decreasing by 20% y/y to 1.472 MMT.

Globally, July coffee exports fell by 1.6% y/y to 11.6 million bags. Brazil's July unroasted coffee exports also saw a decrease of 20.4% y/y to 161,000 MT, and cumulative Oct-Jul coffee exports fell slightly by 0.3% y/y to 115.615 million bags.

On the other hand, the USDA's Foreign Agriculture Service (FAS) projected that world coffee production in 2025/26 will increase by 2.5% y/y to a record 178.68 million bags. This increase could help offset the decreases seen in some regions.

The inventory situation is also being closely watched. ICE-monitored arabica inventories fell to a 1.25-year low of 686,863 bags, while ICE robusta coffee inventories dropped to a 1-month low of 6,552 lots last Thursday.

The market is also feeling the effects of trade tensions. American buyers are voiding new contracts for purchases of Brazilian coffee beans due to the 50% tariffs imposed on US imports from Brazil, tightening US supplies.

Despite these fluctuations, the overall picture for Brazil's 2025/26 coffee harvest is positive, with Safras & Mercado reporting that it was 99% complete as of August 20. Cooxupe, Brazil's largest coffee cooperative and exporter group, reported that the harvest among its members was 94.9% complete as of August 29.

However, concerns about US consumer demand are weighing on prices. The weak US payroll report of +22,000 and the rise in the US unemployment rate to a 3.75-year high of 4.3% have raised doubts about the strength of the US market. As a result, coffee prices traded lower during this period.

In conclusion, the global coffee market is facing a complex set of challenges and opportunities. While some regions are experiencing production and export declines, others are showing signs of recovery. Trade tensions and economic uncertainties are also playing a role in shaping market dynamics.