Just been looking at the coffee market and it's pretty interesting how Brazil's pushing more beans into the global market. Their August green coffee exports jumped 1.4% year-over-year to 3.41 million bags, which is putting real pressure on arabica prices right now. December arabica closed down 0.22% Wednesday while robusta actually gained 2.27%, so there's definitely a split happening in the green coffee market.

What caught my eye is how consistent these export numbers are. Brazil shipped 202,000 MT in July (up 44% y/y), and their full 2023/24 season hit a record 47.3 million bags. Globally, ICO reported coffee exports up 12.2% y/y in July to 11.29 million bags. The supply side of the green coffee market is definitely flooding right now, which is weighing on prices.

But here's the thing—there's a weather story working against that. Brazil's dealing with the driest conditions since 1981, especially in Minas Gerais which produces about 30% of their arabica. And Vietnam got hit by typhoon Yagi, raising concerns about robusta production. Vietnam's already struggling with exports down 9.9% y/y in August. So while we're seeing higher volumes, there's real worry about future supply if drought persists.

Inventories are rebounding though, which is bearish. ICE arabica stocks hit a 1-1/2 year high of 850,554 bags this week, up from the 24-year low of 224,066 bags last November. Robusta inventories also recovered to a 1-year high of 6,521 lots. That's taking some steam out of the green coffee market in the near term.

Looking ahead, USDA projects world production climbing 4.2% in 2024/25 to 176.235 million bags, with Brazil's arabica up 7.3% y/y. Colombia's expected to add 1.6% more. So the green coffee market is looking well-supplied, but weather risks remain the wildcard keeping robusta supported.