MILAN – Coffee futures closed mixed on Friday, 20 December. In New York, the benchmark closed up 125 points at 325 cents, while in London the March contract lost 0.9 percent, ending the week at $5,002. Moving the markets once again was an estimate on the upcoming Brazilian harvest, this time from SAFRAS & Mercado.
The respected analyst predicts that Brazil’s 2025/26 production will decline by 5% to 62.45 million bags.
The Arabica crop will fall sharply, to 38.35 million bags: 15% less than this year harvest.
Statistically, this is one of the lowest crop on record in recent years, only higher than that of 2021/22, when production was severely affected by drought and frost.
“The historic drought that hit the southeast of the country, hitting particularly the states of São Paulo and Minas Gerais, drained energy from the plants, which did not allow for the maintenance of the exuberant blossoming seen in October” says SAFRAS & Mercado in a note.
“Furthermore, many growers, already realizing that the crop would not deliver as expected, increased the percentage of “skeletonization” (a type of pruning), which also helped to reduce the potential production for 2025.”
The perception has worsened further in recent weeks, reads the note.
“It is true that the situation remains open and a clearer vision will only be possible at the end of January and throughout February next year, with the fruit on the tree during the coffee graining stage.
However, as is common after blossoming, some preliminary indications have begun to emerge about Brazil’s next crop.
The most optimistic are talking about 40 to 41 mln bags of arabica, while the most pessimistic point to an estimate of nearly 34 to 35 mln bags.”
The situation is very different on the Robusta front, where there is more optimism and the harvest is expected to be between 22 million and 25 million bags.
SAFRAS & Mercado is working with a preliminary estimate of 24.10 mln bags.
“Although the canephora harvest starts earlier, the picture is also still quite open, and optimism needs to be confirmed with favorable weather in early 2025,” says the Brazilian analyst.
“The indication of lower production in 2025 in Brazil, associated with a scenario of low stocks and aggressive buyers, creates instability in the balance between supply and demand, helping to maintain coffee prices supported” concludes SAFRAS & Mercado.
“The industry remains very active in the market, seeking to build protective stocks due to concerns about future supply.”
