Coffee prices fell on Thursday, influenced by a drop in the Brazilian real. Projections signal a 4.0% increase in global coffee production for 2024/25, though Brazil’s coffee production estimates have been revised down due to drought concerns. The USDA’s FAS anticipates historic lows in coffee stocks, leading to continuing deficits in the arabica coffee market for upcoming years.
Coffee prices experienced a decline on Thursday, with May arabica coffee (KCK25) closing down by $1.60, or 0.43%, while May ICE robusta coffee (RMK25) dropped by $34, or 0.63%. Early gains in coffee prices were lost largely due to a downturn in the Brazilian real, which influenced traders’ perspectives on the market prospects.
According to projections, coffee production for 2024/25 is expected to rise by 4.0% year-over-year to 174.855 million bags, bolstered by a 1.5% increase in arabica production to 97.845 million bags and a 7.5% rise in robusta production to 77.01 million bags. Furthermore, the USDA’s Foreign Agricultural Service (FAS) predicts that ending stocks for 2024/25 will drop by 6.6% to 20.867 million bags, the lowest level in 25 years, from 22.347 million bags the previous year.
In addition, a November 22 forecast from the USDA’s FAS revised Brazil’s coffee production for 2024/25 to 66.4 million metric tons, a decrease from the earlier estimate of 69.9 million metric tons. Furthermore, the FAS anticipates Brazil’s coffee inventories will stand at 1.2 million bags at the conclusion of the 2024/25 season in June, reflecting a 26% reduction year-over-year.
For the subsequent marketing year of 2025/26, Volcafe announced a significant reduction in its Brazil arabica coffee production estimate to 34.4 million bags, down approximately 11 million bags from a previous September assessment. This revision followed a crop tour that revealed the impact of an ongoing drought in Brazil, leading Volcafe to forecast a global deficit of 8.5 million bags of arabica coffee for 2025/26, exceeding the deficit of 5.5 million bags for 2024/25, marking the fifth consecutive year of deficits.
The article highlights the recent decline in coffee prices due to a decrease in the Brazilian real and forecasts a rise in global coffee production. While projections indicate higher production levels for 2024/25, forecasts for Brazil specifically have been adjusted downward due to adverse weather conditions. The continuing pattern of coffee deficits raises concerns about future supply dynamics in the market.
Original Source: www.tradingview.com
