Forecasted Rain In Brazil Plays Havoc With Coffee Futures – CoffeeTalk

Coffee prices today are sharply lower due to forecasts for rain in Brazil, which has sparked long liquidation in coffee futures. Somar Meteorologia reported that dry and hot weather in Brazil for the rest of this week will give way to several days of showers next week, easing dry conditions. Robusta coffee also came under pressure today, as Vietnam’s General Statistics Office reported Vietnam’s Feb coffee exports rose +6.6% y/y to 169,000 MT. The outlook for rain in Vietnam is weighing on coffee prices, with forecasts showing a chance of rain every day for the next week in Vietnam’s Central Highlands, the country’s largest coffee-growing region.

Shrinking inventories are also supportive of coffee prices, as ICE-monitored robusta coffee inventories fell to a 2-month low last Friday of 4,247 lots. Meanwhile, ICE-monitored arabica coffee inventories slid to a 9-1/4 month low on February 18 at 758,514 bags, although they have since recovered to a 2-week high of 809,128 bags as of last Thursday. In a bullish factor, an increased percentage of Brazil’s coffee harvest has already been sold compared with previous years, meaning less supply is still available.

Continued supply fears have supported coffee prices. Cecafe reported that Brazil’s January green coffee exports fell -1.6% y/y to 3.98 million bags. Conab, Brazil’s government crop forecasting agency, forecasted that Brazil’s 2025/26 coffee crop would fall -4.4% y/y to a 3-year low of 51.81 million bags. Conab also cut its 2024 Brazil coffee crop estimate by -1.1% to 54.2 million bags from a September estimate of 54.8 million bags.

The impact of dry El Nino weather last year may lead to longer-term coffee crop damage in South and Central America. Rainfall in Brazil has consistently been below average since last April, damaging coffee trees during the all-important flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop.

Robusta coffee prices are underpinned by reduced robusta production. Vietnam’s coffee production in the 2023/24 crop year dropped by -20% to 1.472 MMT, the smallest crop in four years. The USDA’s biannual report on December 18 was mixed for coffee prices, with the USDA’s Foreign Agriculture Service (FAS) projecting that world coffee production in 2024/25 will increase +4.0% y/y to 174.855 million bags, with a +1.5% increase in arabica production to 97.845 million bags and a +7.5% increase in robusta production to 77.01 million bags.

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