Coffee Prices Slip On Rain In Brazil And Weakness In The Brazilian Real – CoffeeTalk

Coffee prices today are moderately lower due to forecasts for rain in Brazil, which is expected to bring large amounts of rain starting this weekend. The weakness in the Brazilian real (^USDBRL) also weighs on coffee prices as the real fell to a 2-1/4 month low against the dollar today, encouraging export selling from Brazil’s coffee producers. Excessive dryness in Brazil may curb coffee yields and is a bullish price factor. Rainfall in Brazil has consistently been below average since April, damaging coffee trees during the flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop.

Tightness in coffee inventories is limiting losses in coffee prices. ICE-monitored arabica coffee inventories fell to a 4-1-4 month low of 795,874 bags on October 3, and ICE-monitored robusta coffee inventories fell to a 5-month low of 4,054 lots today. However, coffee inventories have recently recovered, with ICE-monitored arabica coffee inventories rising to a 1-1/2 year high of 858,474 bags on September 12, and robusta coffee inventories rising to a 1-year high of 6,521 lots on July 25.

A negative factor for coffee was last Monday’s report from the International Coffee Organization (ICO), which reported that global coffee exports rose +6.5% y/y in August to 10.92 million bags and that global exports during Oct-Aug rose +9.9% y/y to 125.67 million bags. Brazil’s green coffee exports rose +34% y/y to 4.1 million bags, and its 2023/24 coffee exports rose +33% y/y to a record 47.3 million bags.

Robusta coffee prices are underpinned by fears that excessive dryness in Vietnam will damage coffee crops and curb future global robusta production. Vietnam’s agriculture department reported a 20% drop in coffee production in the 2023/24 crop year due to drought, while the USDA FAS projected a slight dip in Vietnam’s robusta coffee production in the new marketing year of 2024/25.

In a supportive factor for coffee prices, Conab, Brazil’s crop forecasting agency, cut its 2024 Brazil coffee production forecast to 54.8 million bags from 58.8 million bags forecast in May. The International Coffee Organization (ICO) also reported a bearish factor for coffee prices, with the USDA’s Foreign Agriculture Service (FAS) projecting a 4.2% y/y increase in world coffee production in 2024/25.

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