Coffee prices declined on Thursday, erasing early gains influenced by a falling Brazilian real. A projected increase in global coffee production for 2024/25 could not mitigate a significant decrease in ending stocks and adverse forecasts for Brazil’s output, exacerbated by drought conditions.
On Thursday, coffee prices experienced a decline, erasing earlier gains due to a drop in the Brazilian real, which adversely affected market sentiment. May arabica coffee futures closed at $1.60 lower, representing a 0.43% decrease, while May ICE robusta coffee fell by $0.34 or 0.63%. Concurrently, projections indicated a 4.0% rise in global coffee production for the 2024/25 season, amounting to approximately 174.855 million bags, with arabica output expected to increase by 1.5% and robusta by 7.5%.
The USDA’s Foreign Agricultural Service (FAS) also reported a forecast showing a significant reduction in ending stocks, anticipating a 6.6% dip to a 25-year low of 20.867 million bags by the end of the 2024/25 season. Brazil’s coffee production estimates for 2024/25 have been adjusted downward to 66.4 million metric tons, a decline from the previously predicted 69.9 million metric tons. Furthermore, Brazilian coffee inventories are projected to fall by 26% year-over-year.
For the 2025/26 marketing year, Volcafe has significantly reduced its estimates for Brazil’s arabica coffee production to 34.4 million bags, reflecting a decrease of about 11 million bags following assessments of severe drought conditions in the region. Expectations indicate a widening global coffee deficit of 8.5 million bags for 2025/26, contrasting with a smaller deficit of 5.5 million bags for the prior year and marking the fifth consecutive year of deficits in arabica coffee production.
In summary, coffee prices fell sharply as the Brazilian real weakened, impacting market dynamics. Projections for increased global coffee production in the 2024/25 season cannot offset declining stocks and adverse weather conditions affecting Brazil’s output. The adjustments highlight continued challenges in the coffee market, primarily driven by climatic factors and economic conditions in coffee-producing regions.
Original Source: www.tradingview.com
