Coffee Prices Recover Early Losses On Brazil Crop Concerns – CoffeeTalk

Coffee prices have seen strength as adverse weather in key coffee-producing countries threatens global coffee production. Brazil has been facing the driest weather since 1981, with rainfall consistently being below average since April, damaging coffee trees during the flowering stage and reducing the prospects for Brazil’s 2025/26 arabica coffee crop. The Minas Gerais region in Brazil received no rain over the past week, or 0% of the historical average.

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. 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.

A supportive factor for coffee was the action by Conab, Brazil’s crop forecasting agency, to cut its 2024 Brazil coffee production forecast on September 19 to 54.8 million bags from 58.8 million bags forecast in May. On September 10, Cecafe reported that Brazil’s Aug green coffee exports rose +1.4% y/y to 3.41 million bags. The rise in Brazil’s green coffee exports was 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. On September 12, 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.

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