Coffee prices have decreased, with arabica and robusta futures reflecting this trend. Analysts predict a 4% rise in global coffee production for 2024/25, despite concerns over reduced Brazilian yields due to drought conditions. The USDA forecasts significant declines in coffee stocks and production, indicating potential supply issues in the coming years.
Coffee prices experienced a decline, with May arabica coffee down by 0.70 cents (0.19%) and May ICE robusta coffee falling by 23 cents (0.43%). This decrease followed a projection from analysts estimating a 4% year-on-year rise in global coffee production for 2024/25, totaling 174.855 million bags, largely attributed to improved arabica and robusta yields.
The USDA’s Foreign Agricultural Service (FAS) anticipates a 6.6% reduction in ending stocks for the 2024/25 season, predicting a drop to a 25-year low of 20.867 million bags. Concurrently, the Brazilian coffee production forecast for 2024/25 was adjusted downward to 66.4 million metric tons, reflecting the detrimental effects of drought conditions.
Looking ahead to the 2025/26 marketing year, Volcafe has revised its arabica production estimate for Brazil down to 34.4 million bags. This reduction represents a significant decrease of approximately 11 million bags since September, indicating the severity of ongoing drought impacts. The projected global arabica coffee deficit for 2025/26 now stands at 8.5 million bags, marking the fifth consecutive year of deficits.
All details provided in this article are for informational purposes only, and Rich Asplund, the author, reported no positions in the related securities at the time of publication. For additional inquiries, please refer to the Barchart Disclosure Policy.
In summary, the Brazilian real’s weakness has adversely affected coffee prices, coinciding with projected increases in global coffee production. However, forecasts indicate significant reductions in Brazilian coffee yields and ending stocks, which may exacerbate supply shortages moving forward. The outlook for coffee production remains cautious, particularly due to the impact of drought conditions in Brazil.
Original Source: www.tradingview.com
