
Jun 7
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Natália Gandolphi
Coffee Weekly Report - 2024 06 07
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- Currently, there are three key developments on the radar: Vietnam's 24/25 crop, Brazil's 24/25 harvest, and USDA's initial 24/25 crop figures.
- In Vietnam, rainfall remains below average, with soil moisture recovering slightly in May, leading to a projected -1.05% change in yields, suggesting 27.45M bags for 24/25, close to 23/24's 27.7M bags.
- Brazil's arabica harvest is 23% complete, matching the five-year average, and conilon is currently at 42% (vs. 41% average). USDA revised Vietnam’s 23/24 output to 29.1M bags and expects 29.0M for 24/25, while Brazil's 24/25 forecast is 69.9M bags.
- Overall, USDA revised down production for 23/24 in selected countries, but expects a recovery in 24/25. The situation in Vietnam and Brazil remains uncertain, with indicators not especially optimistic in terms of fundamentals, although macroeconomic factors have weighed on prices at the end of the week.
Prices dynamic amid mixed crop forecasts
Currently, the market is following three major points in terms of fundamentals: 24/25 Vietnam crop development, 24/25 Brazil crop harvest, and the initial look at USDA’s 24/25 crop figures.
Starting with the first point, rainfall levels in the Central Highlands remain below average, despite the increase seen in May. Currently, cumulative precipitation is at 72% of average levels expected for the first week of June. Over the course of May, soil moisture in the region also recovered, but stayed below average.
Running the model that correlates rainfall levels and the year-over-year change in yields, the picture has changed since April – previously, the model was suggesting a -2% change in yields. Currently, the model suggests a -1.05% change. In figures, it would suggest a total production of 27.45M bags, vs. the 27.18M bags seen in April.
Consequently, the recovery has helped to support production levels for the 24/25 crop in Vietnam – however, not enough to show an increase vs. the 23/24 figures, seen at 27.7M bags.
Second, the harvest in Brazil has advanced as well. Currently, Safras & Mercado reports that 23% of the arabica harvest is complete, in line with the 5-year average (20%). Conilon, shows a similar trend (42% vs. the 41% historical average).
Figure 1: Cumulative Precipitation – Central Highlands (mm)

Source: Refinitiv
Figure 2: Soil Moisture – Central Highlands (in top 1.6m of soil)

Source: Refinitiv
Despite the increase in harvest pace, screen size has reportedly not improved greatly when compared to the beginning of the harvest – which raises the possibility of a downward reduction in production figures. Still, with the total harvest at 21%, it’s early to pinpoint the size of the potential reduction.
These two facts, both in terms of Vietnam and Brazil, have contrasted with USDA’s preliminary figures for the 24/25 crop in both countries. The agency revised Vietnam’s 23/24 output from 27.5M bags to 29.1M in its new post reports, and points to a negligible reduction for 24/25: 29.0M bags.
As for Brazil, the agency didn’t alter its 23/24 estimate, and suggests a 3.6M bags addition in 24/25, especially for arabica – reaching 69.9M bags. Altogether, with the releases from other countries, Latin American production was revised up by 1.58M bags, and would also show a 2.7M bags increase in 24/25 vs. the previously consolidated figure, and a 4.3M bags addition considering the new post figures.
Considering Asian countries, the subtotal for 23/24 has been revised down, by 340K bags, with a change in 24/25 vs. the previously consolidated 23/24 figures of 2.72M bags, and +3M bags considering the new post results.
Figure 3: Distribution – Cumulative Precipitation vs. Yield Change in Vietnam

Source: Refinitiv, Hedgepoint
Figure 4: USDA Crop Updates (‘000 bags)

Source: USDA
In Summary
Altogether, USDA’s new crop figures for 23/24 and 24/25 suggest that the balance will be tighter in 23/24, with a total reduction of 1.9M bags for the countries released so far. On the other hand, the agency expects a 7.3M bags addition for 24/25, when compared to the new post results, or, 5.44M bags compared to the previously consolidated 23/24 figures.
Despite this more bearish outlook from USDA, especially looking at Vietnam’s and Brazil’s figures, the spread curve has a steeper inclination for long-term contracts vs. short-term.
While it is early to pinpoint the actual impact in both crops, as development is still underway in Vietnam, and the harvest is ongoing in Brazil, indicators are not especially optimistic. On the other side, prices are subject to macroeconomic fluctuations: job market data from the U.S. cleared the weekly price increase in todays (07) settlement, showing higher payrolls results than expected.
Weekly Report — Coffee
Written by Natália Gandolphi
natalia.gandolphi@hedgepointglobal.com
natalia.gandolphi@hedgepointglobal.com
Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com
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