Coffee Outlook Q1 2024: Dearth of stocks

Indonesia’s production forecast for 2023/24 has been revised downward, and Brazil’s production for 2024/25 has deteriorated. Despite reduced demand expectations, this production decline is only partially offset.

The balance sheet is still transitioning to a surplus, albeit a smaller one than before. European roasters will be keen on accumulating stocks due to Red Sea disruptions and the European Union Deforestation Regulation (EUDR).

With a market in backwardation, building stocks will come at a cost, but one that some European companies may reluctantly bear in the light of the uncertainty surrounding the EUDR.

We adopt a much more neutral outlook for much of 2024 due to the EUDR and the Red Sea crisis. However, EUDR implementation could have a bearish impact in late 2024 and early 2025.

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