Coffee prices fell on Friday with May arabica coffee down by 0.15% and May robusta coffee down 0.86%. The Brazilian real’s decline coincided with increased global coffee production estimates for the 2024/25 season. Meanwhile, Brazil’s coffee production forecast was lowered due to adverse weather conditions resulting in significant projected deficits for the coming years.
On Friday, coffee prices settled lower, with May arabica coffee (KCK25) closing at -0.55 (-0.15%) and May ICE robusta coffee (RMK25) down -46 (-0.86%). After initially gaining, prices declined following the Brazilian real’s decline and projections of increased global coffee production for the 2024/25 season, which is expected to rise by 4.0% year-on-year to 174.855 million bags.
In this projected increase, arabica production is expected to reach 97.845 million bags, reflecting a 1.5% rise, while robusta production is anticipated to increase by 7.5% to 77.01 million bags. The USDA’s Foreign Agricultural Service (FAS) forecasts a 6.6% drop in ending stocks for 2024/25, predicting them to fall to a 25-year low of 20.867 million bags, down from 22.347 million bags in the previous year.
Moreover, on November 22, the USDA FAS revised Brazil’s 2024/25 coffee production estimate to 66.4 million metric tons (MMT), down from a prior forecast of 69.9 MMT. As for Brazil’s coffee inventories at the close of the 2024/25 season in June, they are projected to be 1.2 million bags, reflecting a 26% year-on-year decrease.
For the 2025/26 marketing year, Volcafe has adjusted its estimate for Brazil’s arabica coffee production to 34.4 million bags, a reduction of approximately 11 million bags from its September projections. This adjustment follows a crop tour revealing the impact of severe drought conditions in Brazil. Volcafe foresees a global arabica coffee deficit of 8.5 million bags for 2025/26, which is wider than the expected 5.5 million bag deficit for 2024/25, marking the fifth consecutive year of deficits.
In summary, coffee prices have declined due to an increase in expected global coffee production and the depreciation of the Brazilian real. Significant adjustments in production forecasts and inventories signal a challenging outlook for coffee farmers, particularly in Brazil, where drought conditions continue to impact yields. The upcoming seasons appear to be characterized by persistent deficits in arabica coffee supplies.
Original Source: www.tradingview.com
