Coffee Prices Finish Sharply Lower On Forecasts For Beneficial Rain In Brazil – CoffeeTalk
Coffee prices fell to 2-1/2 week lows on Monday due to forecasts for rain in Brazil, which eased drought concerns and sparked long liquidation in coffee futures. Forecaster Maxar Technologies said that substantial rain showers are expected this week into next week for Brazil’s coffee-growing regions, which should improve moisture and crop conditions. Global coffee exports rose +6.5% y/y in August to 10.92 million bags and +9.9% y/y to 125.67 million bags during Oct-Aug.
Tightness in coffee inventories is supportive of prices, as ICE-monitored arabica coffee inventories fell to a 4-month low of 795,874 bags last Thursday, and robusta coffee inventories fell to a 4-1/2 month low of 4,284 lots. Coffee inventories had recently recovered as ICE-monitored arabica coffee inventories rose to a 1-1/2 year high of 858,474 bags on September 12, up from the 24-year low of 224,066 bags posted in November 2023.
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 Vietnam’s coffee production in the 2023/24 crop year dropped by -20% to 1.472 MMT, the smallest crop in four years, due to drought. The USDA FAS projected that Vietnam’s robusta coffee production in the new marketing year of 2024/25 will dip slightly to 27.9 million bags from 28 million bags in the 2023/24 season.
Conab, Brazil’s crop forecasting agency, cut its 2024 Brazil coffee production forecast on September 19 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 on September 10, consistent with other recent news showing higher exports.
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 the FAS projecting that world coffee production in 2024/25 will increase +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.
Read More @ Barchart
Source: Coffee Talk