Coffee Falls Back as Conab Revises Up its Brazil Coffee Production Estimate

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Coffee prices have fallen back from 3-week highs and are moderately lower today. Long liquidation emerged in coffee futures after Conab revised its 2024 Brazil coffee production estimate up to 58.8 million bags from a January forecast of 58.1 million bags. Coffee prices initially climbed to 3-week highs on concerns that excessive dryness in Brazil and Vietnam will damage coffee crops and curb global production. Coffee trader Volcafe said Vietnam’s 2024/25 robusta coffee crop may only be 24 million bags, the lowest in 13 years, as poor rainfall in Vietnam has caused irreversible damage to coffee blossoms. Volcafe also projects a global robusta deficit of 4.6 million bags in 2024/25, a smaller deficit than the 9-million-bag deficit seen in 2023/24 but the fourth consecutive year of robusta bean deficits.

Somar Meteorologia reported that Brazil’s Minas Gerais region received no rainfall or 0% of the historical average in the past week, the fourth consecutive week the area has received no rainfall. Vietnam’s National Weather Agency said rainfall in Vietnam’s Central Highland, the main coffee-growing region, totaled 195.6 mm in the ten days from May 1, 41% below the long-term average. Tight robusta coffee supplies from Vietnam, the world’s largest producer of robusta coffee beans, are a bullish factor. On March 26, Vietnam’s agriculture department projected that Vietnam’s coffee production in the 2023/24 crop year would drop by -20% to 1.472 MMT, the smallest crop in four years, due to drought.

The International Coffee Organization (ICO) reported that global Mar coffee exports rose +8.1% y/y to 12.99 million bags, and Oct-Mar global coffee exports were up +10.4% y/y at 69.16 million bags. Cecafe reported that Brazil’s April green coffee exports surged +61% y/y to 3.9 million bags. Brazil’s exporter group Comexim raised its Brazil 2023/24 coffee export estimate to 44.9 million bags from a previous estimate of 41.5 million bags.

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Source: Coffee Talk

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