MILAN – In a day marked once again by strong and contrasting swings in the financial markets, with Tokyo and the European exchanges rallying and Wall Street in deep red, coffee futures markets closed yesterday, Thursday 10 April 2025, with modest changes. In New York, the Ice Arabica coffee futures for May delivery continued to fluctuate within a fairly wide range, closing slightly higher (+115 points) at 342.85 cents.
In London, the July contract made larger gains (+2%) to settle at $4,896.
In a climate of great uncertainty, both in terms of the general economic situation and specific fundamentals, traders are trying to make sense of where the markets are heading.
In its latest report, the International Coffee Organization summarises the bullish and bearish factors that have had the greatest impact on the markets in recent times:
Bearish factors:
- A possible downward adjustment along the coffee price ladder, which is filtering back up to the wholesale market as a signal, with consumers making an economic choice to drink coffee that is more reflective of the deteriorating macro-economic environment. The consumer confidence level in the USA is falling (The Conference Board Consumer Confidence Index 140 fell by 7.2 points in March to 92.9), while household finances are deteriorating (seen through the Expectations Index, which dropped 9.6 points to 65.2, the lowest level in 12 years). The US Federal Reserve maintained its interest rates due to their concerns over the health of the US economy, while the Bank of England and Sweden’s Riksbank also maintained their benchmark rates level due to concerns over the health of their own economies. Furthermore, the USA’s Philadelphia Federal Reserve Economic Anxiety Index (Figure I) increased in Q2 2025, suggesting that consumers may be likely to spend less outside their homes.
- An improved supply situation, with production in Colombia hitting a 29-year high in February 2025.
- Increased uncertainty due to the recently announced reciprocal tariffs by the US government, which may also feed into weakening the demand due to the possibility of a higher retail price of coffee
Bullish factors:
- Low and falling consumer inventories, which are estimated at 15.9 million bags in February 2025, down 7.98 million bags over the recent peak of 23.88 million bags. Furthermore, there is speculation about Brazil’s stocks being at a low level due to the high exports volume, and it will not be replenished until July, when new supply is expected to hit the market.
- Concerns over Brazil’s crop year 2025/26 harvest: long-term weather forecasts are hinting at a higher risk of frost during the Brazilian winter, as well as at drought and ongoing low precipitation. Rainfall in Brazil was below normal levels in March 2025, reducing soil moisture, leading to concerns about 2025/2026 crop development.
- Logistical worries in Yemen, where the Houthis continue to threaten safe passage through the Red Sea. These tense conditions increase the quantity of coffee ‘on the water’ (thereby reducing availability at destinations), in addition to adding pressure on freight rates.
Meanwhile, the Ico confirmed its estimate of world production and consumption for the 2024/25 coffee year at 178 million bags and 177 million bags respectively. This suggests a slight surplus of around one million bags, following two years of large supply deficits.
