Good day. Welcome to DRWakefield’s Weekly Coffee Market Report!
This report touches upon the Arabica and Robusta coffee futures market, currency pairings and news from origin. See our Market Report Terms page for clarity on any terminology in the coffee market report below.
Live Market Data
Coffee Market Report 25/02/2025
This report covers the period from Monday 17th February to Friday 21st February and was written by Dave Rabbich.
Coffee Market
This last week was a different story to many that have preceded it, and not just because it was a short trading week due to Washington’s birthday closing the markets. Opening the week on the 18th at 406.00 c/lb and despite an uptick to a weekly high of 424.50 c/lb the following day, it dropped down to a low of 383.85 c/lb and rounded out the week at 396.00 c/lb. Reasons for the drop include both Arabica and Robusta certified stock inventories rebounding higher and a long liquidation after the recent late January and February market rally. There have also been anecdotal stories of a large volume of central American (primarily Honduras) coffee heading for tender. Central diffs are sitting around 5 year lows and some trade houses may look to send their coffee to be graded for certified stocks in order to access credit to help continue their buying. Although this hasn’t been confirmed this may have played its part in helping to drive the C downward. This is the first time we have seen any significant bearish sentiment in the market since November.
The Robusta market has largely mirrored Arabica over the last week although Robusta prices still have a strong spine forged by drought in Vietnam causing the 23/24 harvest to be the smallest in four years and 24/25 is expected to be marginally smaller still.
Origin
In a somewhat confusing turn of events Safras & Mercado reported last week that 88% of Brazil’s 2024/25 crop had already been sold by producers, faster than the previous YoY figure of 79%. This seems at odds with what we have seen on the ground as roasters have limited their buying for some time now and exporters are disinterested in carrying large stocks due to a high cost of carry and backwardation in the market.
The harvest in Honduras was delayed by approximately 40 days due to excessive rainfall. However, it is expected to be similar in size to last year, with improved quality, fewer defects, and larger beans. Several suppliers noted that in the past, seasonal boundaries were more distinct, but climate change is now affecting these patterns. Some farmers observed both green and red cherries at the same time as flowering. Despite the challenges, farmers are in a favourable position due to high prices, and they are content with the situation. However, as usual, the main struggles they face are finding enough skilled pickers and ensuring they have the cash flow to pay them.
COT & certified stocks
↓ The Non-commercials decreased their overall net long by 1,938 lots to 43,123 futures lots.
↑ Commercials reduced their net short by 1,501 lots to -84,256 futures lots.
Currency & Macro Outlook
US Consumer Confidence (Reuters)
The US Consumer Confidence Index for February experienced a notable drop of 7.0 points, reaching an 8-month low of 98.3, much lower than the anticipated decline to 102.5. This marked the largest decline in two and a half years and the third consecutive monthly decrease. The decline affected coffee C prices, which continued to face pressure. Markets remain concerned about the potential negative impact of tariffs on the US economy. Trump confirmed that US tariffs on imports from Mexico and Canada would proceed as planned. These tariffs were postponed due to new border measures enacted by both Canada and Mexico.
Meanwhile, the Euro has gained some momentum following the German election, while GBP has remained relatively stagnant. However, the Pound could strengthen if the Bank of England maintains a hawkish stance and signals caution against future interest rate cuts.
Coffee Market Report 17/02/2025
This report covers the period from from Monday 10th February to Friday 14th February and was written by Henry Clifford.
Coffee Market
2025 is not a year people will ever forget in coffee. The graph of the coffee market looks more akin to Bitcoin or other cryptocurrencies than it does coffee. The year started at 321.55 c/lb and by the time people were off to grab some roses for Valentine’s day, we closed out at a mighty 419.75 c/lb, 31% up since New Year’s Day! This week, in particular, was very turbulent with some sizeable daily rises (21.5 c/lb) and daily decreases (20.40 c/lb), coupled with even bigger daily trading ranges, 28.45 c/lb on Tuesday 11th! This volatility has made it hard for those to decide when to fix before First Notice Day this week.
The spread between the March and the May terminal has increased as we approach FND, again punishing trade actors who are net short and need to roll their position. It closed at 12.35 c/lb on Friday which represents a painful roll for any outstanding positions. Interestingly, the May to July backwardation was worse at 14 c/lb. There is a real premium for the spot contract, and with the high backwardation market, it is likely that there will be less and less coffee in warehouses at the destination as a result, so it is prudent to have at least 1-2 months contracted ahead so you have stock to roast.
COT & certified stocks
↓ The Non-Commercials decreased their Net Long Position by 5,272 lots to total 45,061 lots Net Long.
↑ Open Interest increased by 5,558 lots from 267,946 to 273,504 lots.
↓ Arabica Certified Stocks decreased to 839,399 bags in total. This is much more than this time last year and around the same level as this time 2 years ago in Feb 2023.
↓ 131,309 bags are pending grading.
Arabica Stocks Report
Origin
2 weeks ago, Colombia and the USA averted a trade war after Colombia agreed to accept the military aircraft carrying deported migrants from America. As a result, Washington said it would not impose its threatened penalties. This is welcome news as the US is the largest importer of Colombian coffee currently, accounting for about 40%. Colombia exported 12.323 million 60-kg bags in January-December, of which 39.81% were destined to the US, according to updated figures from FNC.
Looking beyond Colombia, the Trump administration also proposed large tariffs on imports from Canada and Mexico. Mexico is also a sizeable exporter to the United States and if any of these proposals come to fruition, it will sure lead to higher costs for importers and roasters that will have to be passed onto consumers. Or, it is possible that more volume from these countries goes to other markets such as the EU or Asia.
Access to finance has become more and more of a challenge in recent times and this is particularly noticeable in Honduras. Banco Occidente, one of the largest local lenders has reportedly stepped back from coffee and has reduced its exposure, given the current market level. Other pre-finance banks have either maintained credit lines, which buys you half the physical coffee it did last year, or also reduced their lines. This has meant that exporters are stretched and offers are few and few between. Some differentials offered are very competitive, but whether or not they ship is another matter.
Currency & Macro Outlook
As discussed, Trump’s tariffs are on everyone’s minds. This doesn’t just affect origin however, the Greenback and inflation are also sensitive to these “beautiful” measures, as Trump calls them. When there is pandemonium and uncertainty in the world, the Dollar generally benefits and strengthens. This may see the Euro and Pound Sterling weaken and this, coupled with the high coffee price, could worsen the pain for roasters. The other risk is that if tariffs make goods more expensive and this provokes inflation, there might be a need for the Fed to raise rates which could further strengthen the Dollar.
At the moment, things have not worsened too much with GBP and EUR at 1.25 and 1.04 respectively, but the threat looms like a grey cloud over everyone’s heads. Let’s hope things get sunnier soon!
Coffee Market Report 10/02/2025
This report covers the period from from Monday 3rd February to Friday 7th February and was written by Hannah Wakefield.
Coffee Market
Once again, it has been another record-breaking week in the NY coffee market. No doubt, by the time this report is published, another new record will have been broken!
It opened on Monday 3rd February at 375 c/lb, and hit highs of 388 c/lb, the then highest ever level reached. Although, as I write this, 388 c/lb feels like a distant memory. Movement throughout the week continued upward. Wednesday saw the biggest range (19.5 c/lb), with a low of 381 c/lb and a high of 401.10 c/lb. Breaking the 400 c/lb psychological threshold for the first time. This soar in the rally was driven by specs buying after the release of the previous day’s open interest data. Things didn’t slow across Thursday or Friday, with the high of the week a massive 413.95 c/lb on Friday, before closing at 404.35 c/lb.
The market remains firmly bullish; the index roll began on Friday and will continue until Friday, 14th February, offering support to the rally. Further tightness across supply chains, with delayed crops, depleted volumes and logistical challenges keeping the prices elevated.
COT & certified stocks
↑ Commercials increased their long position by 6,630 lots to 58,489 lots. Whilst also increasing their short by 3,894 lots to 151,273 lots total. The Specs decreased their long position by 2,014 lots to 58,621 lots, and increased their short position by 1,116 lots to 8,288 lots. Leaving their net long at 50,333.
↓ Arabica certified stocks decreased by 139,009 to 854,553 total.
↑ 134,722 bags are pending grading.
Origin
Figures have been released for Brazilian coffee exports from January, showing they are up 9.5% compared to January 2024. Totalling 4.09 million bags throughout the month. A further 0.725 million bags more than were exported in December. This increase is significant as many Brazilian producers have been reluctant to sell their coffee as the price, and therefore value, has continued to rise. Brazil has also been facing serious logistical difficulties which have held up shipments and seen stocks piling up in the ports. The increase in exports over January is positive as the backlog begins to clear, but the situation with delays is continuing.
Colombian production and exports were also up in January compared to December. The FNC have stated that 1.35 million bags were harvested in January, a massive 41% higher than the volume produced in January 2024. Exports are also up 23% to 1.15 million bags in January 2025. Although Colombia similarly is suffering from logistical delays. Overall, across the last 12 months (February 2024 – January 2025) production in Colombia has upped by a significant 23% to 13.9 million bags, whilst exports are up 17% to 12.5 million bags, and they remain the world’s biggest producer of washed Arabica.
Currency & Macro Outlook
DXY
The eyes of the world are on the US and Trump’s tariffs. Ever dramatic, Trump is proposing a series of tariffs on imports that he intends to reshape global trade in the US’s favour. These include a proposed massive 25% tariff on all imports of steel and aluminium from all other countries. He also plans to announce ‘reciprocal tariffs’, a tit for tat for countries who place tariffs on US imports. China has already reacted, imposing retaliatory tariffs on the US, the Chinese embassy in Washington DC said on Sunday, making the hopes of avoiding a China-US trade war seem hopeful indeed. The result of these tariffs has brought uncertainty, and is likely to impact their economic growth. Moreover, these tariffs are likely to cause further volatility in the currency market.
GBP/USD
GBP ended the week slightly higher, supported by the BoE’s chief economist Huw Pill. He suggested that the bank isn’t a place to declare ‘job done’ when it comes to inflation. This has tempered expectations for further easing following the BoE’s interest rate cut on Thursday 6th February.
