Coffee prices fell on Friday as May arabica and robusta contracts declined after production estimates for 2024/25 projected significant year-on-year increases. The USDA also forecasted lower ending stocks at a historical low and revised Brazil’s coffee production estimates down due to drought impacts. Future production expectations suggest continued supply shortages.
Coffee prices faced a decline on Friday, with May arabica coffee (KCK25) falling by 0.55 cents (0.15%) and May ICE robusta coffee (RMK25) decreasing by 46 cents (0.86%). Initial gains reversed due to projections that world coffee production will rise by 4% year-on-year to 174.855 million bags, driven by a 1.5% increase in arabica and a 7.5% increase in robusta output.
The USDA’s Foreign Agricultural Service (FAS) anticipates a 6.6% decline in 2024/25 ending stocks, reaching a 25-year low of 20.867 million bags, down from 22.347 million bags in 2023/24. Additionally, they revised Brazil’s coffee production forecast for the 2024/25 season to 66.4 million metric tons, a decrease from earlier estimates of 69.9 million metric tons.
For the 2025/26 marketing year, Volcafe reduced its Brazil arabica coffee production estimate to 34.4 million bags due to the impacts of prolonged drought conditions, marking an 11 million bag drop from previous projections. Volcafe also predicts a significant global arabica coffee deficit of 8.5 million bags for 2025/26, exacerbating the ongoing supply challenges for the fifth consecutive year.
On the date of publication, Rich Asplund had no direct or indirect positions in any mentioned securities. The content provided here is for informational purposes only, with additional compliance references available through Barchart’s Disclosure Policy.
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In summary, coffee prices have recently dipped due to increased production forecasts, particularly for Brazil, which has experienced adverse weather conditions affecting crop yield. The USDA’s reports indicate significant expected decreases in coffee stocks and revisions to production estimates, leading to anticipated supply deficits in upcoming years. Understanding these market dynamics is essential for stakeholders in the coffee industry.
Original Source: www.tradingview.com
