Coffee: climate and global stocks should influence price formation

Brazil is expected to harvest the largest coffee harvest in its history. The estimate from StoneX consultancy is for production of 75.3 million bags, an increase of 20%. Of these 50.2 million bags are Arabica coffee, representing a 37% increase in production compared to the previous season.

In May, the large production of the Brazilian harvest put pressure on prices, which fell to the lowest level in a year and a half.

But the slow pace of the harvest and certified stocks on the stock exchange, at low levels, interrupted this downward trend in recent weeks.

This Tuesday (02) with the news of the progress of the harvest in Minas Gerais, favored by drier weather, the contract for July fell again on the New York Stock Exchange.

Leonardo Rossetti, market intelligence analyst at Stonex, says that high humidity levels affected the final coffee maturation process, which led some producers to postpone the harvest. The scenario and pace of work in Brazilian coffee plantations are beginning to change. !With the forecast of predominantly dry weather, the harvest has been gaining pace and as this work progresses, over the next few weeks, we should see a large supply entering the market and, possibly, new pressure on coffee prices."

Global stocks

The USDA (United States Department of Agriculture) is expected to release this month the forecast for the Brazilian coffee harvest and, subsequently, the estimate for global production. An announcement much awaited by the market and which will influence prices in the coming weeks.

Rossetti warns that reports released so far on supply in important producing regions show that combined stocks point to an 11% drop in global stock. This reinforces StoneX's estimate that production recovery should occur, but unevenly across countries.

"The record production for Brazil also leads to an estimate of a surplus of 10 million bags in the global balance of supply and demand. However, the distribution of these stocks must be quite uneven and concentrated mainly in Brazil. In other producing and consuming countries, stocks should remain lower, which could generate some bottlenecks and some fluctuations throughout the second half of the year", reinforces Rossetti.

Data from Reuters shows that on June 1st, stocks on exchanges were 434,930 bags. At the same time, in 2025, stocks were 882,212 bags.

Weather on radar

Another important point that, according to Rossetti, could bring new fluctuations in international coffee prices throughout the year is El Niño. Depending on the intensity of the phenomenon, it could impact the flowering of the next harvest in Brazil, between September and October, which could bring new support to prices.

Also pay attention immediately to the risks of frost. "We have seen new cold fronts approaching and the risk of frost always means fear on the part of producers. So, throughout June and July, if the frost warnings materialize in some way... just the risk of them occurring should bring upward fluctuations in prices, bringing volatility as a counterpoint to the downward pressure that the advance of the harvest in Brazil will bring."

Source: CNN