March arabica coffee (KCH25) today is up +3.50 (+1.21%), and January ICE robusta coffee (RMF25) is up +8 (+0.17%).

Coffee prices today added to Wednesday's sharp gains, with Mar arabica posting a contract high and Dec arabica posting a new  13-year nearest-futures high.   Coffee prices gained today after the USDA's Foreign Agricultural Service (FAS) projected Brazil's 2024/25 coffee production at 66.4 MMT, below the USDA official forecast of 69.9 MMT.  The USDA's FAS also projected Brazil's coffee inventories of 1.2 million bags when the 2024/25 season ends in June, down a -26% y/y.  Coffee prices fell from their best levels today as a stronger dollar sparked profit-taking and long liquidation in coffee futures.  

Coffee prices were already on the offensive due to concern about longer-term coffee crop damage due to Brazilian drought conditions.  Rainfall in Brazil has consistently been below average since April, damaging coffee trees during the all-important flowering stage and reducing the prospects for Brazil's 2025/26 arabica coffee crop.  Brazil has been facing the driest weather since 1981, according to the natural disaster monitoring center Cemaden.

Tight robusta supplies are supportive for robusta prices after Vietnam's General Department of Customs reported last Monday that Vietnam's October coffee exports fell -11.6% m/m to 45,412 MT and Vietnam's Jan-Oct coffee exports fell -11.1% y/y to 1.15 MMT.  Robusta coffee also has support from concerns that heavy rain in Vietnam will flood coffee fields, which could delay its coffee harvest.  Vietnam, the world’s biggest robusta producer, is at the start of its coffee harvest.  

Robusta coffee prices are underpinned by reduced robusta production.  Vietnam's agriculture department said on March 26 that Vietnam's coffee production in the 2023/24 crop year dropped by -20% to 1.472 MMT, the smallest crop in four years, due to drought.  The USDA FAS on May 31 projected that Vietnam's robusta coffee production in the new marketing year of 2024/25 will dip slightly to 27.9 million bags from 28 million bags in the 2023/24 season.  

In a supportive factor for coffee prices, Conab, Brazil's crop forecasting agency, cut its 2024 Brazil coffee production forecast on September 19 to 54.8 million bags from May's forecast of 58.8 million bags.

Recent rainfall in Brazil temporarily eased dryness concerns.  Somar Meteorologia reported Monday that rainfall in Brazil's biggest arabica coffee growing area of Minas Gerais received 60.9 mm of rain last week, or 127% of the historical average.  Minas Gerais is Brazil's largest arabica coffee-producing area.

Signs of larger global coffee supplies are bearish for prices after the International Coffee Organization (ICO) reported November 8 that global coffee exports in Sep rose +25% y/y to 10.76 mln bags and that exports from Oct-Sep rose +11.7% y/y to 137.27 mln bags.  

Tightness in coffee inventories is supporting coffee prices.  ICE-monitored arabica coffee inventories partially recovered from the 24-year low of 224,066 bags posted in November 2023 to post a 1-3/4 year high of 879,117 bags Tuesday.  Meanwhile, ICE-monitored robusta coffee inventories fell to a 6-1/2 month low of 3,854 lots last Tuesday after climbing to a 1-3/4 year high of 6,521 lots in July.  ICE-monitored robusta coffee inventories are moderately above the record low of 1,958 lots posted in February 2024.

Brazilian coffee export news has been bearish.  Cecafe reported last Monday that Brazil's Oct green coffee exports rose +11% y/y to 4.57 million bags.  Also, Cecafe reported on July 11 that Brazil's 2023/24 coffee exports rose +33% y/y to a record 47.3 million bags.  

In a bearish factor, the International Coffee Organization (ICO) last month projected that 2023/24 global coffee production would climb +5.8% y/y to a record 178 million bags due to an exceptional off-biennial crop year.  ICO also said global 2023/24 coffee consumption would climb +2.2% y/y to a record 177 million bags, resulting in a 1 million bag coffee surplus.

The USDA's bi-annual report on June 20 was bearish for coffee prices.  The USDA's Foreign Agriculture Service (FAS) projected that world coffee production in 2024/25 will increase +4.2% y/y to 176.235 million bags, with a +4.4% increase in arabica production to 99.855 million bags and a +3.9% increase in robusta production to 76.38 million bags.  The USDA's FAS forecasts that 2024/25 ending stocks will climb by +7.7% to 25.78 million bags from 23.93 million bags in 2023/24.  The USDA's FAS projects that Brazil's 2024/25 arabica production would climb +7.3% y/y to 48.2 mln bags due to higher yields and increased planted acreage.  The USDA's FAS also forecasts that 2024/54 coffee production in Colombia, the world's second-largest arabica producer, will climb +1.6% y/y to 12.4 mln bags.