Coffee prices fell on Thursday, erasing early gains influenced by a declining Brazilian real. Projections indicate a global coffee production increase for the 2024/25 season, while Brazil’s output estimates have decreased. The market anticipates significant deficits in arabica coffee production for the upcoming years following drought impacts.
On Thursday, coffee prices shifted lower after initially gaining ground. May arabica coffee (KCK25) recorded a decline of -1.60 (-0.43%), while May ICE robusta coffee (RMK25) fell by -34 (-0.63%). The downturn in prices was influenced by a weakening Brazilian real and projections of an increase in global coffee production for the 2024/25 season, estimated at 174.855 million bags, which represents a 4.0% year-over-year rise.
Arabica production is expected to rise by 1.5% to 97.845 million bags, and robusta production is projected to increase by 7.5% to 77.01 million bags. The USDA’s Foreign Agricultural Service anticipates that ending stocks will decrease by -6.6% to a 25-year low of 20.867 million bags due to higher output. Additionally, Brazil’s coffee production forecast for 2024/25 has been revised down to 66.4 million metric tons from a previous estimate of 69.9 million metric tons.
In preparation for the 2025/26 marketing year, Volcafe has reduced its estimate for Brazil’s arabica coffee production to 34.4 million bags, a reduction of approximately 11 million bags from September following assessments of drought conditions. This adjustment has led to projections of an arabica coffee deficit of -8.5 million bags for 2025/26, surpassing the -5.5 million bag deficit for the previous year.
On the date of publication, Rich Asplund held no positions in the securities mentioned. The data and information presented are intended for informational purposes only, and additional disclosures can be viewed in the Barchart Disclosure Policy.
In summary, coffee prices have decreased following early gains due to a weakening Brazilian real and improved production forecasts. The USDA and Volcafe have provided updated estimates indicating an increase in global coffee production, although Brazil’s output is projected to decline significantly due to drought. These mixed signals contribute to a complex market environment.
Original Source: www.tradingview.com
