Coffee Prices On Forecast for Increased Brazil Coffee Production

Coffee prices are currently moderately lower, with robusta coffee falling to a 4-week low. Brazil’s 2024/25 coffee production is projected to increase by +4.2% y/y to 67 million bags, while Vietnam’s Jan coffee exports rose by 14.8% m/m and +67.4% y/y to 238,266 MT. This is due to the easing of dry conditions in Brazil, which accounts for about 30% of Brazil’s arabica crop.

Coffee inventories are tight, which is a supportive factor for coffee prices. On Wednesday, ICE-monitored robusta coffee inventories fell to a record low of 1,958 lots. However, larger coffee supplies from Brazil are bearish for prices, with Cecafe reporting that Brazil’s Jan coffee exports jumped +45% y/y to 3.7 million bags. The International Coffee Organization (ICO) reported that Dec global coffee exports rose +13.6% y/y to 12.168 million bags, and from Oct-Dec, global coffee exports rose +6.8% y/y to 32.419 million bags.

Coffee buyers are shunning robusta bean purchases from Vietnam due to rising shipping costs and delivery times due to Houthi rebel attacks on commercial ships in the Red Sea. Tight robusta coffee supplies from Vietnam are bullish for prices, with Vietnam’s General Department of Customs reporting a fall of -8.7% y/y to 1.62 MMT. The Vietnam Coffee Association projected that 2023/24 Vietnam coffee production would fall to 1.6 MMT-1.7 MMT, down from 1.78 MMT a year earlier.

Conab, Brazil’s crop forecasting agency, projected Brazil’s 2024 arabica coffee production to climb +5.4% y/y to 58.1 million bags. The 2024 coffee crop year is seen as the most productive of Brazil’s biennial coffee year cycle. El Nino weather events are bullish for coffee prices, as they typically bring heavy rains to Brazil and drought to India, negatively impacting coffee crop production.

The International Coffee Organization (ICO) projected that 2023/24 global coffee production would climb +5.8% y/y to 178 million bags due to an exceptional off-biennial crop year. The USDA’s Foreign Agriculture Service (FAS) projected that world coffee production in 2023/24 will increase +4.2% y/y to 171.4 million bags, with a +10.7% increase in arabica production to 97.3 million bags and a -3.3% decline in robusta production to 74.1 million bags.

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