Coffee prices reversed early gains to close lower on Thursday due to a drop in the Brazilian real and expectations of increased global coffee production for the 2024/25 season. The USDA forecasts a reduction in Brazil’s coffee inventories and a significant production estimate cut for arabica coffee amid ongoing drought conditions. Global coffee deficits are predicted for the upcoming marketing year, signaling challenges ahead for the coffee market.
On Thursday, coffee prices fell after initially rising, with May arabica coffee (KCK25) closing down $1.60 (0.43%) and May ICE robusta coffee (RMK25) down $34 (0.63%). This decline was influenced by a plummet in the Brazilian real and projections indicating a 4.0% increase in global coffee production for the 2024/25 season, amounting to 174.855 million bags. Significant increases were seen in both arabica and robusta production, with arabica rising 1.5% to 97.845 million bags and robusta increasing 7.5% to 77.01 million bags.
In summary, despite initial gains, coffee prices decreased due to a weakening Brazilian real and updated forecasts indicating higher global production for the upcoming years. Nevertheless, the USDA predicts a notable drop in coffee inventories, highlighting concerns over future supply rates, particularly from Brazil, where a severe drought is affecting arabica production. As the market anticipates a deficit in arabica coffee for 2025/26, stakeholders remain watchful of trends in price and production.
Original Source: www.tradingview.com
