Brazil Harvest Pressures Weigh on Coffee Prices

Coffee prices have fallen to 4-week lows due to Brazil’s coffee harvest pressures, with the 2024/25 coffee harvest being 81% completed as of July 23, faster than 74% last year and faster than the 5-year average of 77%. Brazil is the world’s largest producer of arabica coffee beans, with 75% completion and 95% robusta completion. The weaker Brazilian real (^USDBRL) is undercutting coffee prices as the real fell to a 1-week low against the dollar today.

A rebound in ICE coffee inventories from historically low levels is negative for prices. ICE-monitored robusta coffee inventories rose to a 1-year high last Thursday of 6,521 lots, up from the record low of 1,958 lots posted in February 2024. Arabica coffee also has support after Monday’s report from the Coffee Trading Academy projected Brazil’s 2024/25 coffee crop at 67.4 million bags, well below an earlier forecast of above 70 million bags.

Smaller coffee exports from Vietnam, the world’s largest robusta coffee producer, are bullish for prices. The General Department of Vietnam Customs reported that Vietnam’s July coffee exports fell -35.7% y/y to 70,000 MT, while its Jan-July coffee exports were down -13.8% y/y at 964,000 MT. 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 said on March 26 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 Vietnam Coffee Association also said that Vietnam’s 2023/24 coffee exports would drop -20% y/y to 1.336 MMT.

The International Coffee Organization (ICO) reported on July 5 that global May coffee exports rose +9.8% y/y to 11.78 million bags, and Oct-May global coffee exports were up +10.9% y/y to 92.73 million bags. Cecafe reported on July 11 that Brazil’s 2023/24 coffee exports rose +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 and a 3.9% increase in robusta production.

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