Below-Normal Rain in Brazil Supports Coffee Prices | U.S. Markets

Might arabica espresso (KCK25) as we speak is up +9.80 (+2.63%), and Might ICE robusta espresso (RMK25) is up +31 (+0.58%).

Espresso costs as we speak are trading larger on below-normal rain in Brazil that will scale back espresso crop yields.  Somar Meteorologia reported final Monday that Brazil’s largest arabica espresso growing space of Minas Gerais obtained 11.4 mm the week ended February 22, or 24% of the historic average.  Brazil is the world’s largest arabica espresso growing nation.

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Espresso costs have help from shrinking provides after ICE-monitored robusta espresso inventories fell to a 2-month low final Friday of 4,247 tons.  Additionally, ICE-monitored arabica espresso inventories slid to a 9-1/4 month low on February 18 at 758,514 luggage, though they’ve since recovered to a 1-week high of 809,128 luggage as of final Thursday.

In a bullish issue, an elevated share of Brazil’s espresso harvest has already been offered in contrast with earlier years, that means there’s much less provide nonetheless obtainable to promote.  Safras & Mercado reported final Monday that producers offered 88% of Brazil’s 2024/25 espresso harvest as of February 11, quicker than final yr’s comparable year-earlier determine of 79% and the 5-year average of 82%.  In the meantime, gross sales of the 2025/26 crop have been sluggish at 13% of the crop, effectively behind the 4-year average of 22%, which suggests a lack of new provide and an unwillingness of producers to promote.

Continued provide fears have supported espresso costs.  Cecafe reported on February 12 that Brazil’s January inexperienced espresso exports fell -1.6% y/y to three.98 million luggage.  Additionally, on January 28, Conab, Brazil’s authorities crop forecasting company, forecasted that Brazil’s 2025/26 espresso crop would fall -4.4% y/y to a 3-year low of 51.81 million luggage.  Conab additionally cut its 2024 Brazil espresso crop estimate by -1.1% to 54.2 million luggage from a September estimate of 54.8 million luggage.  

The influence of dry El Nino climate final yr could result in longer-term espresso crop harm in South and Central America.  Rainfall in Brazil has constantly been beneath average since final April, damaging espresso trees during the all-important flowering stage and decreasing the prospects for Brazil’s 2025/26 arabica espresso crop.  Brazil has been going through the driest climate since 1981, in keeping with the natural catastrophe monitoring center Cemaden.  Additionally, Colombia, the world’s second-largest arabica producer, is slowly recovering from the El Nino-spurred drought final yr.

Robusta espresso costs are underpinned by lowered robusta manufacturing.  As a consequence of drought, Vietnam’s espresso manufacturing within the 2023/24 crop yr dropped by -20% to 1.472 MMT, the smallest crop in 4 years.  The USDA FAS on Might 31 projected that Vietnam’s robusta espresso manufacturing within the new advertising and marketing yr of 2024/25 will dip barely to 27.9 million luggage from 28 million luggage within the 2023/24 season.  As well as, Vietnam’s Common Statistics Workplace reported on January 10 that 2024 Vietnam espresso exports fell -17.1% y/y to 1.35 MMT.  Conversely, the Vietnam Espresso and Cocoa Affiliation on December 3 raised its 2024/25 Vietnam espresso manufacturing estimate to twenty-eight million luggage from an October estimate of 27 million luggage.  

Information of bigger world espresso exports is bearish for costs.  Conab reported on February 4 that Brazil’s 2024 espresso exports rose +28.8% y/y to a report 50.5 million luggage.  Additionally, Vietnam’s Common Statistics Workplace reported on February 6 that Vietnam’s Jan espresso exports rose +6.3% m/m to 134,000 MT.  Vietnam is the world’s largest producer of robusta espresso.  Nonetheless, ICO reported on February 6 that Dec world espresso exports fell -12.4% y/y to 10.73 million luggage, and Oct-Dec world espresso exports fell -0.8% y/y to 32.25 million luggage.

The USDA’s biannual report on December 18 was combined for espresso costs.  The USDA’s International Agriculture Service (FAS) projected that world espresso manufacturing in 2024/25 will increase +4.0% y/y to 174.855 million luggage, with a +1.5% increase in arabica manufacturing to 97.845 million luggage and a +7.5% increase in robusta manufacturing to 77.01 million luggage.  The USDA’s FAS forecasts that 2024/25 ending shares will fall by -6.6% to a 25-year low of 20.867 million luggage from 22.347 million luggage in 2023/24.  Individually, the USDA’s FAS on November 22 projected Brazil’s 2024/25 espresso manufacturing at 66.4 MMT, beneath its earlier forecast of 69.9 MMT.  The USDA’s FAS tasks Brazil’s espresso inventories at 1.2 million luggage on the finish of the 2024/25 season in June, down -26% y/y.

For the 2025/26 advertising and marketing yr, Volcafe on December 17 cut its 2025/26 Brazil arabica espresso manufacturing estimate to 34.4 million luggage, down by about 11 million luggage from a September estimate after a crop tour revealed the severity of an prolonged drought in Brazil.  Volcafe tasks a world 2025/26 arabica espresso deficit of -8.5 million luggage, wider than the -5.5 million bag deficit for 2024/25 and the fifth consecutive yr of deficits. 

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