Coffee Prices Sharply Higher on Concern About Global Coffee Output

Coffee prices are currently higher, with arabica coffee posting a 6-month high and robusta coffee posting an all-time high. Coffee crop concerns in Brazil and Vietnam are underpinning prices. Arabica coffee has support from weather concerns in Brazil, as the Minas Gerais region received 2.5 mm of rainfall in the past week, or 12% of the historical average. Robusta coffee has support from fears that excessive dryness in Vietnam will limit the country’s robusta coffee production.

Tight robusta coffee supplies from Vietnam, the world’s largest producer of robusta coffee beans, are a major bullish factor. On March 26, Vietnam’s agriculture department projected that Vietnam’s 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. The Vietnam Coffee Association said that Vietnam’s 2023/24 coffee exports could drop -20% y/y to 1.336 MM. Marex Group Plc forecasts a global 2024/25 robusta coffee deficit of -2.7 million bags due to reduced output in Vietnam.

Bernish factors for coffee include Brazil’s Mar green coffee exports jumping +41% y/y to 3.9 million bags, the International Coffee Association (ICO) showing global coffee exports in Feb rising +6.8% y/y to 11.33 million bags, and total 2023/24 global coffee exports from Oct-Feb rising +11.1% y/y to 56.2 million bags.

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 2-3/4 month high of 3,222 lots today. Larger coffee exports from Brazil are bearish for prices, with Brazil exporter group Comexim raising its Brazil 2023/24 coffee export estimate to 44.9 million bags from a previous estimate of 41.5 million bags.

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