Coffee: from a big deficit to a bigger surplus in one season! #ChartOfTheDay

The coffee market will change significantly within a single season. The coffee price remains high on the market. How do those forecasts affect futures contracts in early 2023? This article is part #ChartOfTheDay series.

Current coffee season 2022/23 should end with a deficit of 2.17 million 60-kg bags. HedgePoint is expecting this market to quickly recover and fly into surplus in next season, 2023/24, with 3.74 million 60-kg bags above demand.

This is mainly driven by Brazil, where analysts expect production to rise from around 59 million 60-kg bags in season 2022/23 to between 64.9 and 68.9 million 60-kg bags in season 2023/24. However, it will still be around 14% smaller than the record set in season 2020/21, when Brazil harvested 72.6 million 60-kg bags of coffee.

 When we look at the coffee futures chart in monthly view (MN), we can see that the price is currently in the middle of a “rise and fall” pattern, with history going back as far as the beginning of the 90s. As we are far from reaching a record production forecast, there is a very low probability that price will drop below $c100/Lbs anytime soon.