Brazil's official statistics agency has lowered its coffee harvest forecast, while market analysts are raising concerns about the potential impact of a strong El Niño weather pattern. The combination of a revised supply estimate from the world's largest producer and climate uncertainty is expected to influence market behavior and volatility in the coming months, particularly for key producers in South America and Southeast Asia.
The Brazilian Institute of Geography and Statistics (IBGE) reduced its monthly harvest estimate by 1.2%, bringing the new national forecast to 66 million 60kg bags. According to the revised figures, Arabica production is projected to hold steady at 44.4 million bags. The adjustment comes from the Robusta crop, which is now estimated at 21.6 million bags. Despite the downward revision, this volume still represents a 3% increase over the previous year's Robusta harvest.
Adding to supply-side concerns, a recent report from financial services firm StoneX highlights the growing risk posed by El Niño. Climate models indicate an over 80% probability that the phenomenon will persist and potentially strengthen toward the end of the year. A strong El Niño could bring insufficient rainfall and high temperatures during the critical bean-filling stage in Brazil, with the regions of Matas de Minas, southern Espírito Santo, and southern Bahia identified as particularly vulnerable. The report also noted significant drought risks for major Robusta producers Vietnam and Indonesia, threatening crop yields in those countries.