Coffee Prices Decline Amid Increased Global Production Forecasts

Coffee prices fell on Friday as forecasts revealed a potential increase in global production, particularly in Brazil, alongside declining ending stocks. The USDA has projected reduced production levels due to drought, leading to significant anticipated deficits in the arabica segment for 2025/26.

Coffee prices experienced a decline on Friday, with May arabica coffee closing down 0.15% and May ICE robusta coffee decreasing by 0.86%. These losses followed initial gains as forecasts indicated a potential 4.0% increase in global coffee production for the 2024/25 season, attributed partly to a boost in robusta production of 7.5%.

The USDA’s Foreign Agricultural Service (FAS) predicts a reduction in ending stocks by 6.6%, marking a 25-year low of 20.867 million bags. This estimate follows Brazil’s projected coffee production for the 2024/25 season being revised downwards to 66.4 million metric tons, owing to adverse climatic conditions.

For the 2025/26 marketing year, Volcafe has revised its estimate for Brazil’s arabica coffee production to 34.4 million bags, reflecting an approximate 11 million bag reduction from previous forecasts, primarily due to severe drought conditions. The global arabica coffee deficit is projected to widen in 2025/26, surpassing the deficit expected for the current year.

In summary, coffee prices decreased following forecasts of increased global production yet declining stocks. Brazil’s coffee production estimates have revised downward due to ongoing drought conditions, leading to projected deficits in future years. Market participants should remain attentive to these developments affecting coffee supply and pricing.

Original Source: www.tradingview.com