Coffee prices fell on Thursday, with May arabica coffee down 1.60 cents and robusta coffee down 34 cents. The drop was linked to a weaker Brazilian real and increased projections for global coffee production, despite a forecasted decline in Brazilian coffee inventories and production estimates due to drought conditions. Volcafe anticipates continued deficits in arabica coffee production for subsequent years.
On Thursday, coffee prices experienced a decline, erasing early gains made during the trading session. Specifically, May arabica coffee closed down by 1.60 cents, or 0.43%, while May ICE robusta coffee saw a decrease of 34 cents, or 0.63%. This downturn can be attributed to a weakening Brazilian real and expectations for an increase in global coffee production for the 2024/25 season.
Market analysts project a 4.0% year-on-year increase in worldwide coffee production, estimating it will reach 174.855 million bags. In particular, arabica coffee production is expected to rise by 1.5% to 97.845 million bags, while robusta production could see a substantial 7.5% increase to 77.01 million bags. However, the USDA’s Foreign Agricultural Service (FAS) anticipates that ending stocks will decline by 6.6%, reaching a 25-year low of 20.867 million bags.
The USDA’s FAS recently revised Brazil’s 2024/25 coffee production estimate down to 66.4 million metric tons, down from a prior forecast of 69.9 million metric tons. Additionally, it was reported that Brazil’s coffee inventories are anticipated to drop to 1.2 million bags by the end of the season, representing a 26% year-on-year decrease.
Looking ahead to the 2025/26 marketing year, Volcafe has reduced its Brazilian arabica coffee production estimate to 34.4 million bags, reflecting a significant decline of about 11 million bags from earlier estimates due to the adverse impacts of a severe drought. Volcafe further predicts a global arabica coffee deficit of 8.5 million bags for 2025/26, marking the fifth consecutive year of shortfalls in production.
On the publication date, Rich Asplund did not hold any positions in the mentioned securities. The information provided in this article is intended for informational purposes only and can be referenced further under the Barchart Disclosure Policy.
In summary, coffee prices have diminished due to a declining Brazilian real and increased global coffee production projections. Despite an anticipated rise in production, predictions of lower ending stocks and drought-stricken output in Brazil contribute to market volatility. As analysts revise forecasts downward for Brazil’s coffee production, future deficits in arabica coffee are expected to persist, influencing market conditions.
Original Source: www.tradingview.com
