Coffee Closes Higher On Adverse Global Weather Events – CoffeeTalk

Coffee prices have surged on Tuesday, with concerns that adverse weather in key coffee-producing countries may curb production. Brazil has been experiencing the driest weather since 1981, with rainfall consistently below average since April, damaging coffee trees during the flowering stage and reducing prospects for Brazil’s 2025/26 arabica coffee crop. The Minas Gerais region in Brazil received 9.8 mm of rain over the past week, which accounts for about 30% of Brazil’s arabica crop. Heavy rain from typhoon Yagi last week flooded Vietnam’s robusta coffee fields, potentially curbing the country’s coffee output.

Dec arabica and Nov robusta posted contract highs, while nearest-futures (U24) robusta posted a new all-time high. Coffee prices have rallied sharply over the past two weeks as adverse global weather events threaten coffee production. 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 that its coffee production in the 2023/24 crop year dropped by -20% to 1.472 MMT, the smallest crop in four years, due to drought.

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. Brazil’s green coffee exports rose +1.4% y/y to 3.41 million bags, consistent with other recent news showing higher exports. On a global basis, the International Coffee Organization (ICO) reported that global coffee exports rose +12.2% y/y in July to 11.29 million bags and that global exports during Oct-July rose +10.5% y/y to 115.01 million bags.

A rebound in ICE coffee inventories from historically low levels is negative for prices. ICE-monitored arabica coffee inventories rose to a 1-1/2 year high of 858,474 bags, up from the 24-year low of 224,066 bags posted in November 2023. In a bearish factor, the International Coffee Organization (ICO) said that 2023/24 global coffee production climbed +5.8% y/y to 178 million bags due to an exceptional off-biennial crop year.

The USDA’s bi-annual report on June 20 was bearish for coffee prices, with projections of world coffee production in 2024/25 increasing +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.

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