Coffee Market Commentary - May 8th, 2025
Well, it’s USDA time. Around the same time every year, the USDA begins releasing its attache reports, with a first official forecast for the new crop of each of the major producing countries. These estimates are then used in their World Coffee Report, which will be published on June 25th, providing a global supply and demand forecast for the 2025-2026 crop year.
The global balance sheet is one of the most important fundamental factors for the coffee market, with international prices reacting strongly to expectations of either a deficit or surplus. The USDA is one of the most highly regarded reports in the industry.
As it is still very early, some may say even premature for some regions where the main flowering of the crop hasn’t even occurred yet, the June USDA report will be one of the first forecasts for the new crop. A revision is then published in December.
As of now, data from the USDA shows two consecutive years of a supply surplus, with the last deficit being seen in the 2022-2023 crop year. The previous crop, in 2024-2025, according to the USDA, saw a nearly 7 million-bag surplus. It will be interesting to see if that number is revised to reflect the extended market rally, which has touched record highs and many differentials at a steep premium, indicating a tightness in supplies. It seems almost illogical for prices to soar while supplies are ample.
Looking ahead, however, we can expect that the high prices that were sustained for so long to have a positive impact on global yields. After producers were struggling to afford inputs after COVID, we saw many crops decline on poor agricultural practices. We would think the opposite would now be true as coffee prices soared. Higher prices should mean higher profits, which, hopefully, producers used to put back into the crops in the form of fertilization and other agricultural improvements.
With the release of the individual USDA reports, the market will digest new information on production, exports and consumption, providing us with a baseline of what we can expect over the course of the next crop year. But, with so many unpredictable factors (Brazil’s winter season, we are looking at you!), it would be naïve to think the coffee market could see calm and quiet times ahead.
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