Deficit for the fifth year in a row: due to the drought in Brazil, arabica prices hit a record high
Kyiv • UNN
Due to the prolonged drought in Brazil, production of Arabica coffee will fall to 34.4 million bags. The global coffee shortage will continue for the fifth year in a row. This has already led to a historic high in prices since 1972.
Global coffee production may significantly lag behind demand in the 2025-2026 season: a major trader Volcafe Ltd. has lowered its forecast for coffee production in Brazil, which threatens to further hit consumers' pockets.
Reports UNN with reference to Bloomberg.
Volcafe Ltd. one of the world's largest coffee sellers has lowered its forecast for Brazilian Arabica production. This was influenced by the situation of a prolonged drought in Brazil, the world's largest coffee producer.
A crop tour revealed the severity of the prolonged drought. The country will produce only 34.4 million bags of Arabica beans.. This is about 11 million bags less than in September, according to the presentation,
It is also noted that global coffee production will lag behind global consumption by 8.5 million bags in the 2025/26 season. Experts remind that this will be the 5th consecutive year with a shortage in the coffee market.
Inventory reduction- high price prospects
A series of poor coffee harvests in key producing countries has led to a decline in global coffee stocks over the past four years. This, in turn, will affect prices - according to Bloomberg, we are talking about achieving a new record in the price segment.
Amid crop failures among key producers, Arabica futures rose by more than 80% in 2024.
On Tuesday, they rose 5.5%, reaching the highest level in history since 1972.
Rising coffee prices may lead to further increases in costs. Manufacturers will be forced to shift them to consumers. Faced with a squeeze, sellers have already raised prices and dropped discounts to protect their margins.
Market situation
When prices rise, brokers require producers and exporters to deposit more cash in the form of margin deposits to cover possible losses.
At the same time, some traders who have sold futures are forced to buy them back to leave the market - this leads to an even greater increase in prices in a vicious circle.
addition
Meanwhile, according to the EFE, the world's largest coffee producer and supplier, Brazil, exported 46.4 million 60 - kilogram bags of grain between January and November 2024.
Revenues from the sale of Brazilian coffee in the period from January to November were a record - 11.302 billion US dollars. This is 22.3% more than in the whole of last year.
The results were also significant, given the constant problems of Port Logistics, which forced exporters to face "millions of additional costs to overcome the lack of infrastructure," according to the material.
