After soaring and setting a 50-year high, coffee on the New York Stock Exchange underwent negative adjustments and is moving away from its peaks. The reason for the most recent upward move was the release of the forecast for Brazil’s 2025 coffee crop by trading company Volcafé, which reduced Brazilian arabica production to 34 mln 60-kg bags, down 11 mln bags from 2024. At a time of apprehension about supply, the release of such data prompted a disproportionate reaction on coffee futures, with a sharp high followed by a negative correction, increasing volatility and generating even more insecurity among market players.
The size of the cut scared the market. The fact is that the numbers surprised even the most pessimistic. The forecasts for Brazil’s arabica crop in 2025 ranged from 41 to 43 mln bags, with the most pessimistic pointing to 40 mln bags and the most optimistic still believing in 44 mln bags. It is true that some growers were already indicating production below 40 mln, talking about 38 mln bags. Thus, the projection of 34 mln bags was far below what was being discussed in the market. And this was the reason for the disproportionate reaction, which caused coffee to be traded at 348 cents a pound.
At the end of the year, the market has been increasingly concerned over future supplies due to low stocks. The fact is that the strong flow of exports reported by the International Coffee Organization (ICO) and Brazil’s record-breaking exports have not yet appeared in the global industry stocks. Perhaps they will only appear in February and March, after the winter period in the Northern Hemisphere is over. Of course, this ends up generating strong apprehension among buyers.