Coffee company Arabica witnesses an uptrend due to the strengthening Brazilian Real currency
In the world of coffee, recent developments have been shaping the market significantly. Let's delve into the latest updates.
Brazil, the world's leading Arabica coffee producer, has faced a slight dip in its production estimates for 2025. Brazil's crop forecasting agency, Conab, has cut its Arabica coffee crop estimate by 4.9% and its total Brazilian coffee production estimate by 0.9% for the same year. This reduction comes amidst a challenging environment, with a lack of rain in the coffee-growing regions potentially impacting the critical flowering period for coffee trees.
The effects of this production decrease are already being felt in the export market. Brazil's July robusta and arabica exports saw a significant drop, with robusta exports plunging by 49% year-on-year and arabica exports falling by 21%. Cumulative coffee exports for the October-July period also saw a minor decrease of 0.3%, reaching 115.615 million bags.
Meanwhile, other major coffee producers are also experiencing production setbacks. Vietnam, for instance, has seen a 20% year-on-year decrease in its coffee production for the 2023/24 crop year, resulting in 1.472 MMT of production. Similarly, Vietnam's 2024 coffee exports fell by 17.1% year-on-year to 1.35 MMT.
The global coffee export market also experienced a decline in July, with shipments decreasing by 1.6% year-on-year to 11.6 million bags. Notably, Brazil's coffee exports in July fell by 28% to 2.7 million bags.
Inventory levels have also been affected by these production and export trends. ICE robusta coffee inventories fell to a 1.75-month low of 6,517 lots, while ICE-monitored arabica inventories reached a 16.5-month low of 658,302 bags.
The US-imposed 50% tariffs on Brazilian imports have contributed to a drawdown in ICE coffee inventories. The Brazilian real, in contrast, rallied to a 15-month high against the dollar on Thursday.
Despite these challenges, Brazil is forecasted by the US Department of Agriculture as the largest producer of Arabica coffee beans in 2025, with a slightly expected decrease in Arabica production by 1.7% to about 97 million 60-kg bags. This ensures Brazil's position as the top global producer.
In terms of coffee prices, Arabica prices (KCZ25) increased by 1.38% on Thursday, closing at +5.20, while Robusta prices (RMX25) decreased by 0.07% on the same day. These price fluctuations reflect the ongoing balance between supply and demand in the global coffee market.
As we move forward, it will be interesting to see how these trends continue to shape the global coffee market. Stay tuned for more updates.
