Why is coffee production falling in major coffee producing countries?

Hedgepoint's latest coffee futures report says global supply faces growing uncertainty and futures prices are running high with limited short-term downside. Brazil, the largest producer, has cut its Arabica forecast after drought, heat and unstable rain. Several Central American countries have seen crops and infrastructure damaged by hurricanes and storms.

Arabica output is now expected to fall 1.4 percent to 42.6 million bags of 60 kg, while Robusta in Espirito Santo may rise 12.2 percent to 22.6 million bags. Colombia's slight increase will not offset losses across major coffee producing countries, and La Nina adds further risk, so prices are likely to stay firm.

Recently, international investment bank Hedgepoint released a coffee futures price report stating that global coffee supply faces multiple uncertainties, with futures prices continuing to run at high levels and limited downside in the short term. Brazil, as the world's largest coffee producer, has seen its Arabica production forecast revised downward due to drought, high temperatures, and unstable rainfall; several Central American countries have suffered severe damage to coffee crops and infrastructure from hurricanes and storms. Although Colombia's new season is expected to see a slight increase in production, it is unlikely to offset the overall production decline in major producing regions. Combined with potential climate disruptions from La Niña, international coffee prices are expected to remain firm. Stay tuned to origin updates—Front Street Coffee continues to track them for you.

Recently, international investment institution Hedgepoint released its latest coffee futures price report, pointing out that global supply uncertainties continue to rise, and coffee futures prices are therefore maintaining an upward trend, with little likelihood of a decline in the short term.

Brazil, as the world's largest and most important coffee producer, has seen its coffee production decline due to severe weather such as drought, high temperatures, and unstable rainfall. Currently, the international coffee market is generally pessimistic about Brazil's 2024/25 coffee supply, and this has even affected expectations for the 2025/26 crop year.

Hedgepoint stated that the market had earlier worried that Brazil's drought would cause long-term damage to coffee crops, and weather in Minas Gerais, Brazil's main Arabica-producing state, remains unstable. The report shows that last week rainfall in the state's coffee-producing areas was only 6 millimeters, equivalent to 10% of the historical average, but this week some areas experienced heavy rain that triggered flooding and caused one death.

As a result, Arabica coffee production is expected to decrease by 1.4% to 42.6 million bags (60 kg/bag). In Espirito Santo, the main Robusta-producing state, the climate is relatively stable, and Robusta coffee production is expected to increase by 12.2% to 22.6 million bags. However, this is only a preliminary forecast; as the coffee cherries develop, production estimates may be further revised downward. In addition, several institutions, including the United States Department of Agriculture, are continuing to lower Brazil's coffee production estimates.

In addition to Brazil, several other countries are also facing challenges, especially in Central America, where frequent hurricanes have increased the risk to 2024/25 coffee supply. In mid-November, Costa Rica declared a state of emergency due to hurricane impacts, with many areas experiencing heavy rainfall and disasters such as flooding, mudslides, and landslides.

The report shows that more than 180 floods have occurred in the country, with at least 2 deaths and 3 missing, a large number of homes destroyed, more than 1,300 people evacuated, and several major highways forced to close. According to statistics from Costa Rica's coffee association ICAFE, about 15% of the country's coffee crops have been affected.

Honduras, Central America's largest coffee producer, has also been severely hit. According to a report from Honduras' National Secretariat of Risk and Emergency Management, after being struck by Storm Sara, flooding occurred in many parts of the country, with at least 1 death and about 56,000 people affected to varying degrees, and the entire country entered a state of emergency.

Storm Sara caused major economic losses, severely damaged infrastructure across various regions, and destroyed a large amount of agricultural equipment, adversely affecting the production of coffee and other crops.

According to statistics, in Lempira Department, a cumulative 400,000 quintals (20,000 tons) of coffee crops were lost, with estimated losses reaching 112 million US dollars. In addition, the country reported the loss of at least about 30 hectares of coffee crops. Meanwhile, in the western coffee-producing regions, because roads, highways, and bridges were destroyed, large amounts of already harvested coffee could not be transported out, so actual losses may be even greater.

However, there is also good news. Recently, the Foreign Agricultural Service (FAS) of the United States Department of Agriculture released its latest 2024/25 forecast for Colombia's coffee production. Because weather conditions are favorable for coffee production and coffee farmers are adopting better agronomic practices to mitigate the effects of climate change, pushing up production in the new season, coffee production is expected to be 12.9 million bags, up 1.1% from last year, and exports are expected to reach 12 million bags.

Although Colombia's production increase is positive for the market, it is not enough to make up for the production shortfalls in Brazil and several Central American countries. Moreover, the La Niña phenomenon, which is highly likely to appear by the end of the year, will further disrupt the climate in many countries. Therefore, international coffee prices will continue to remain high, and a downward trend is unlikely in the short term.

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The above content is compiled by CoffeeHunters, a coffee news website.