Coffee prices have dropped to their lowest in a month, falling moderately today. This decline is largely due to an increase in its global supplies.
The International Coffee Organization (ICO) reported that global coffee exports in June rose by 3.8% year-on-year, reaching 10.78 million bags. From October to June, its exports increased by 10.1% compared to the previous year, totaling 103.47 million bags.
Brazil’s coffee harvest is further pressuring prices downward. Safras & Mercado reported that by July 29, Brazil had completed 87% of its 2024/25 harvest, a faster pace than last year’s 80% and above the five-year average of 84%. As the largest producer of Arabica coffee beans, Brazil’s rapid harvest impacts global supply and prices.
Another bearish factor is the weakening Brazilian real, which hit a 3-1/3 year low against the dollar today, making Brazilian coffee exports cheaper on the international market. This encourages Brazilian producers to sell more coffee abroad, increasing global supply.
Additionally, ICE coffee inventories have rebounded from historically low levels, contributing to the price drop. Robusta inventories monitored by ICE reached a one-year high of 6,521 lots on July 25, up from the February 2024 record low of 1,958 lots. Arabica inventories also climbed to a 1-1/2 year high on June 25, with 842,434 bags, recovering from a 24-year low of 224,066 bags in November 2023.
Supply and Demand Factors
Despite these bearish factors, some conditions are providing support for its prices. Dry weather in Brazil is a significant concern. Somar Meteorologia reported that the Minas Gerais region, which produces about 30% of Brazil’s Arabica crop, received only 0.4 mm of rain last week, which is just 5% of the historical average. This lack of rainfall could negatively affect future production.
Meanwhile, smaller exports from Vietnam also contribute to potential price increases. The General Department of Vietnam Customs reported a 35.7% year-on-year decline in Vietnam’s coffee exports in July to 70,000 metric tons. Additionally, exports from January to July decreased by 13.8% year-on-year, totaling 964,000 metric tons.
Vietnam’s Coffee Production Challenges
The threat of excessive dryness in Vietnam could further impact robusta coffee production. A trader, Volcafe warned that Vietnam’s 2024/25 robusta crop might only yield 24 million bags, the lowest in 13 years, due to poor rainfall. This situation could lead to a global robusta deficit of 4.6 million bags for 2024/25.
However, bearish trends persist as Brazil’s 2023/24 coffee exports surged 33% year-on-year to a record 47.3 million bags, and global coffee production for 2023/24 increased by 5.8% to 178 million bags.
The USDA projects a 4.2% rise in world coffee production for 2024/25, with significant increases in Arabica and robusta production, suggesting that its global market might continue to face a surplus in the coming year.
Make money without lifting your fingers: Start using a world-class auto trading solution.
LonghornFX, your trusted Partner in CFDs, Cryptocurrencies and Stocks.
- Broker
- Min Deposit
- Score
- Visit Broker
- Award-winning Cryptocurrency trading platform
- $100 minimum deposit,
- FCA & Cysec regulated
- 20% welcome bonus of upto $10,000
- Minimum deposit $100
- Verify your account before the bonus is credited
- Over 100 different financial products
- Invest from as little as $10
- Same-day withdrawal is possible
- Fund Moneta Markets account with a minimum of $250
- Opt in using the form to claim your 50% deposit bonus
Learn to Trade
Never Miss A Trade Again
Signal Notification
Real-time signal notifications whenever a signal is opened, closes or Updated
Get Alerts
Immediate alerts to your email and mobile phone.
Entry Price Levels
Entry price level for every signal Just choose one of our Top Brokers in the list above to get all this free.