Dry conditions in Brazil have contributed to rising coffee prices, with May arabica coffee increasing by 1.89% and ICE robusta coffee by 1.06%. Brazil’s biggest coffee growing region recorded only 71% of typical rainfall, impacting production forecasts for upcoming years. Significant reductions in expected coffee stocks and production levels signal ongoing difficulties in the coffee market.
Brazil’s coffee prices have experienced moderate gains, largely attributed to insufficient rainfall and the strong performance of the Brazilian real. On Wednesday, May arabica coffee closed up by 1.89% and May ICE robusta coffee increased by 1.06%. According to Somar Meteorologia, the Minas Gerais region, which is the largest producer of arabica coffee in Brazil, recorded only 30.8 mm of rainfall during the week ending March 15, amounting to just 71% of its historical average.
The Brazilian real projected that global coffee production for the 2024/25 year would increase by 4% year-on-year, reaching 174.855 million bags, with arabica production rising by 1.5% to 97.845 million bags and robusta production increasing by 7.5% to 77.01 million bags. The USDA’s Foreign Agricultural Service (FAS) forecasts a decline in ending stocks for the same period, predicting a 6.6% drop to a 25-year low of 20.867 million bags from 22.347 million bags for 2023/24.
In a significant adjustment, Volcafe revised its estimate for Brazil’s arabica production for the 2025/26 marketing year to 34.4 million bags, down approximately 11 million bags from its previous estimate made in September. This adjustment follows findings from a crop tour that highlighted the impact of prolonged drought conditions in Brazil. Additionally, Volcafe forecasts a global arabica coffee deficit of 8.5 million bags for the 2025/26 year, a notable increase from the 5.5 million bag deficit projected for 2024/25.
As of the publication date, Mr. Rich Asplund disclosed that he held no positions in any of the mentioned securities. All data presented in this article is for informational purposes and can be reviewed further under the Barchart Disclosure Policy.
In summary, insufficient rainfall in Brazil has led to increased coffee prices, with notable adjustments in production forecasts. The USDA and Volcafe outlined declines in coffee inventories and production levels, suggesting looming deficits in the global coffee market. The combination of meteorological reports and market indicators highlights the challenges faced by coffee producers in Brazil, affecting both local and international coffee prices.
Original Source: www.tradingview.com
