Coffee prices have risen due to insufficient rainfall in Brazil’s coffee-growing areas and the strength of the Brazilian real, with projections indicating a future decline in both production and ending stocks.
On Wednesday, coffee prices observed modest advancements, with May arabica coffee futures rising by 1.89% and May ICE robusta coffee futures increasing by 1.06%. These gains were attributed to the dry weather conditions in Brazil, particularly in the Minas Gerais region, which reported rainfall at only 71% of its historical average. Furthermore, the strength of the Brazilian real contributed to the price increases.
According to projections from the Brazilian real C, global coffee production is expected to rise by 4.0% year-on-year to reach approximately 174.855 million bags in the 2024/25 cycle. This will include a 1.5% increase in arabica production amounting to 97.845 million bags, alongside a 7.5% increase in robusta production to 77.01 million bags. However, the USDA’s FAS forecasts indicate a concerning drop in ending stocks, which are projected to decline by 6.6% to a 25-year low, amounting to 20.867 million bags.
In conclusion, while coffee prices are gaining traction due to limited rainfall in Brazil and a strong currency, projections indicate a potential decline in production and ending stocks for the upcoming years. The forecasted coffee deficit for 2025/26 underlines the ongoing challenges faced by the coffee market, influenced mainly by drought conditions affecting key producing regions.
Original Source: www.tradingview.com
