Coffee Prices Decline Amid Brazilian Real Slump and Production Forecasts
Coffee prices experienced declines on Thursday due to a slump in the Brazilian real and updated forecasts for increased global coffee production in 2024/25. The USDA projects significant reductions in Brazil’s coffee inventories and arabica production estimates, predicting a coffee deficit in subsequent marketing years.
On Thursday, May arabica coffee (KCK25) concluded trading down by 1.60 (-0.43%), with May ICE robusta coffee (RMK25) closing down by 34 (-0.63%). Coffee prices initially saw gains but later declined due to a drop in the Brazilian real and projections indicating a 4.0% year-on-year increase in global coffee production for the 2024/25 marketing year, totaling 174.855 million bags.
The USDA’s Foreign Agricultural Service (FAS) forecasts a 1.5% rise in arabica production to 97.845 million bags, alongside a more substantial 7.5% increase in robusta production to 77.01 million bags. Ending stocks for 2024/25 are predicted to decrease by 6.6%, marking a 25-year low of 20.867 million bags compared to 22.347 million bags in 2023/24.
Moreover, on November 22, the USDA’s FAS adjusted Brazil’s projected coffee production for 2024/25 to 66.4 million metric tons, lowering it from a prior estimate of 69.9 million metric tons. Brazil’s coffee inventories are anticipated to fall by 26% year-on-year, with an expected total of 1.2 million bags at the end of the 2024/25 season in June.
For the 2025/26 marketing year, Volcafe reduced its estimate for Brazilian arabica coffee production to 34.4 million bags, representing an approximate 11 million bag decline based on findings from a recent crop tour that highlighted the adverse effects of a prolonged drought in Brazil. This analysis suggests a predicted global deficit of 8.5 million bags in arabica coffee for 2025/26, extending the trend to five consecutive years of shortages.
In summary, recent developments point to declining coffee prices as the Brazilian real falters and production forecasts reveal mixed outcomes for the coffee sector. While global coffee production is expected to increase, significant declines in Brazil’s output and inventories signal potential challenges ahead in the market. These factors, coupled with an ongoing global deficit, will be crucial for stakeholders to monitor closely.
Original Source: www.tradingview.com
