Coffee prices fell as the Brazilian real weakened, with May arabica coffee down by $0.55 and robusta coffee decreasing by $46. The USDA projects a 4.0% increase in global coffee production for 2024/25, while Brazil’s coffee production estimates have decreased due to drought conditions, leading to anticipated coffee shortages.
Coffee prices experienced a decline on Friday after initial gains as the Brazilian real faced depreciation. The May arabica coffee (KCK25) closed down by $0.55, or 0.15%, while May ICE robusta coffee (RMK25) fell by $46, or 0.86%. This shift occurred amidst projections of a rise in world coffee production for the 2024/25 season, estimated to increase by 4.0% year-on-year, totaling 174.855 million bags. Notably, arabica production is expected to grow by 1.5% to 97.845 million bags, whereas robusta production is anticipated to rise by 7.5% to 77.01 million bags.
The USDA’s Foreign Agricultural Service (FAS) reports that ending stocks for coffee in 2024/25 are expected to drop by 6.6%, reaching a 25-year low of 20.867 million bags, down from 22.347 million bags in the previous season. Additionally, the FAS forecasted Brazil’s coffee production for 2024/25 at 66.4 million metric tons, a reduction from its prior estimate of 69.9 million metric tons. Brazil’s coffee inventories are projected to decline by 26% year-on-year, totaling 1.2 million bags by the end of the 2024/25 season in June.
Looking ahead to the 2025/26 marketing year, Volcafe has revised down its Brazil arabica coffee production estimate to 34.4 million bags. This adjustment reflects roughly an 11 million bag decrease from its forecast in September, attributed to severe drought conditions encountered during a recent crop tour. Volcafe predicts a global arabica coffee deficit of 8.5 million bags for the 2025/26 period, broader than the previous year’s deficit of 5.5 million bags, marking the fifth consecutive year of shortages.
In summary, coffee prices have settled lower primarily due to the depreciation of the Brazilian real and projections of increased global coffee production. The USDA’s FAS anticipates a significant drop in Brazil’s coffee inventories, alongside a widening deficit in arabica coffee production for the upcoming seasons. These indicators suggest challenges within the coffee market that may influence pricing and availability.
Original Source: www.tradingview.com
