Coffee prices dropped on Friday, with arabica and robusta coffees closing lower. Global coffee production is projected to rise by 4.0% for 2024/25, yet Brazil’s estimated production has been revised downwards. Inventory levels are also forecasted to fall sharply, indicating ongoing supply constraints.
Coffee prices saw a decline on Friday, with May arabica coffee settling down by 0.55 cents, or 0.15%, and May ICE robusta coffee falling by 46 cents, or 0.86%. This downward trend occurred despite initial gains as reports emerged regarding increased global coffee production forecasts for the 2024/25 season.
According to projections, world coffee production is anticipated to rise by 4.0% year-on-year, reaching 174.855 million bags. Notably, arabica production is expected to increase by 1.5%, totaling 97.845 million bags, while robusta production may rise by 7.5% to 77.01 million bags. The USDA’s Foreign Agricultural Service (FAS) indicated a significant reduction in ending stocks, predicting a 6.6% decline to a 25-year low of 20.867 million bags.
In contrast, Brazil’s coffee production for the same season is projected at 66.4 million metric tons, a reduction from the previously forecasted 69.9 million metric tons. This is coupled with a forecast of 1.2 million bags in Brazil’s coffee inventories at the end of the 2024/25 season, representing a 26% decrease year-on-year.
For the 2025/26 marketing year, Volcafe has revised its production estimate for Brazil’s arabica coffee to 34.4 million bags, marking a decrease of roughly 11 million bags from earlier estimates. The forecast predicts a global deficit in arabica coffee of 8.5 million bags, which is an increase from the 5.5 million bag deficit expected for the 2024/25 season, marking the fifth consecutive year of shortages.
In summary, coffee prices have experienced a decline influenced by projected increases in global coffee production, specifically in Brazil. Despite the anticipated rise in overall production, forecasts indicate lower inventory levels and diminishing production estimates for the upcoming 2025/26 season. These dynamics suggest a continuing trend of coffee supply challenges in the near future.
Original Source: www.tradingview.com
