Coffee Prices Fall as USDA Projects Increases in Coffee Output and Ending Stocks

Coffee prices have been moderately lower due to the USDA’s bi-annual report, which projected an increase in 2024/25 global coffee production and an increase in 2024/25 global coffee ending stocks. The report projected that world coffee production in 2024/25 will increase by 4.2% y/y to 176.235 million bags, with a 4.4% increase in arabica production to 99.855 million bags and a 3.9% increase in robusta production to 76.38 million bags. The USDA’s FAS forecasts that 2024/25 ending stocks will climb by 7.7% to 25.78 million bags from 23.93 million bags in 2023/24. Brazil’s 2024/25 arabica production will climb by 7.3% y/y to 48.2 million bags due to higher yields and increased planted acreage. Colombia, the world’s second-largest arabica producer, will climb +1.6% y/y to 12.4 million bags.

The pace of the Brazilian coffee harvest has picked up, a bearish factor for coffee prices. Safras & Mercado reported that Brazil’s 2024/25 coffee harvest was 44% completed as of June 18, faster than 39% last year at the same time and faster than the 5-year average of 40%. A rebound in ICE coffee inventories from historically low levels is also negative for prices. ICE-monitored robusta coffee inventories fell to a record low of 1,958 lots on February 21, but recovered to an 11-1/2 month high Thursday of 5,995 lots.

Arabica coffee prices are supported by concerns that drier-than-normal conditions will adversely affect Brazil’s coffee crops. Somar Meteorologia reported that Brazil’s Minas Gerais region received no rain for the second straight week last week, accounting for about 30% of Brazil’s arabica crop. Robusta coffee prices are underpinned by fears that excessive dryness in Vietnam will damage coffee crops and curb global production. Vietnam’s robusta coffee production in the new marketing year of 2024/25 will dip slightly to 27.9 million bags from 28 million bags in the 2023/24 season.

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