Below-Normal Rainfall In Brazil Supports Coffee Prices – CoffeeTalk

Coffee prices are currently moderately higher due to concerns about abnormally dry conditions in Brazil, which could curb the country’s coffee production. 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. Brazil has been facing the driest weather since 1981, according to natural disaster monitoring center Cemaden.

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, with the USDA FAS projecting a slight dip in robusta coffee production in the new marketing year of 2024/25.

Conab, Brazil’s crop forecasting agency, cut its 2024 Brazil coffee production forecast to 54.8 million bags from May’s forecast of 58.8 million bags. Tightness in coffee inventories is supporting coffee prices, with ICE-monitored arabica coffee inventories partially recovering from a 24-year low of 224,066 bags in November 2023 to post a 1-1/2-year high of 861,590 bags on Monday. ICE-monitored robusta coffee inventories fell to a 6-month low of 3,904 lots today after climbing to a 1-3/4-year high of 6,521 lots in July.

The International Coffee Organization (ICO) reported a bearish factor for coffee prices, with global coffee exports rising by 6.5% y/y in August to 10.92 million bags and during Oct-Aug to 125.67 million bags. Cecafe reported Brazil’s 2023/24 coffee exports rose by 33% y/y to a record 47.3 million bags.

The USDA’s bi-annual report on June 20 was bearish for coffee prices, with the FAS projecting a 4.2% y/y increase in world coffee production in 2024/25, 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.

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