Coffee Prices Fall on Increased Global Coffee Exports

Arabica coffee (KCK24) and ICE robusta coffee (RMK24) are down -1.80 (-0.85%) and -6 (-0.16%), respectively, as coffee prices decline. The International Coffee Association (ICO) reported that global coffee exports in February rose +6.8% y/y to 11.33 million bags, while total 2023/24 global coffee exports from October-Feb rose +11.1% y/y to 56.2 million bags. Concerns about excessive dryness in Vietnam’s robusta coffee production have pushed robusta prices up to an all-time high last Thursday and arabica coffee up to a 5-3-5/4 month high today.

The Minas Gerais region in Brazil, which accounts for about 30% of Brazil’s arabica crop, received 2.5 mm of rainfall in the past week, or 12% of the historical average. This has led to tight robusta coffee supplies from Vietnam, the world’s largest producer of robusta coffee beans, being a major bullish price factor. Vietnam’s agriculture department projected that its coffee production in the 2023/24 crop year could drop by -20% to 1.472 MMT, the smallest crop in four years, due to drought. Marex Group Plc forecasts a global 2024/25 robusta coffee deficit of -2.7 million bags due to reduced output in Vietnam.

Coffee inventories have rebounded from historically low levels, with ICE-monitored robusta coffee inventories falling to a record low of 1,958 lots on February 21 but recovering to a 2-1/2 month high of 3,094 lots last Thursday. Larger coffee exports from Brazil are bearish for prices, with Cecafe reporting a 36.5% y/y increase in February arabica coffee exports to 2.806 million bags.

The El Nino weather event is bullish for coffee prices, as it typically brings 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.

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