By Volcafe Ltd, one of the world’s biggest coffee traders, scaled down its outlook for Brazil’s arabica production, according to a Bloomberg report.
The trading company cut its outlook after a crop tour revealed the severity of an extended drought in the world’s largest producer.
According to the report, Volcafe estimates Brazil’s arabica premium quality production at 34.3 million bags in the coming season.
This is down by 11 million bags from the trading company’s September projections.
This would mean that global coffee production would fall short of global consumption by 8.5 million bags during the 2025-26 season, Bloomberg reported.
This would also mark the fifth straight year of deficits in the coffee market.
Weather woes
Brazil “had the potential of moving the global supply and demand equilibrium back into a much-needed surplus,” the news agency quoted Volcafe as saying.
However, the results of our crop tour indicate significantly high levels of blossom failure.
Volcafe’s estimates were based on a crop tour of 1,850 sample farms, which showed “the stark impact” of weather on coffee trees.
A prolonged period of drought in Brazil, which ran from April to September affected crops throughout the country.
It depleted soil moisture, caused leaves to fall off trees and prevented blossoming.
According to the report, trees that did grow, blossoms failed to flower and develop further.
Outlook for 2025-26 worse than current season
Volcafe said that the outlook for Brazil’s production for the next season is worse than this year.
In the current season, Brazil’s arabica production is expected to be at 43.3 million bags, resulting in a global deficit of 5.5 million bags.
A bag weighs 60 kilograms (132 pounds).
Volcafe said:
The loss of Brazil’s 2025-26 arabica crop is a critical flag to the outlook for the market structure.
Additionally, certified inventories of arabica held by futures exchanges are now unlikely to rise above a target threshold.
Higher production would have enabled these exchanges to stockpile arabica.
Consequently as production is expected to fall next year, the market will not be able to move into a structure where current prices are lower than their futures contracts.
Arabica coffee futures traded in New York have surged to the highest since 1977 on concerns over the drought’s impact in Brazil.
At the time of writing, coffee futures on the Intercontinental Exchange were 342.73 US cents per pound, up 2.8% from the previous close.
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