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MILAN – Coffee futures prices showed contrasting trends yesterday (Tuesday 26 August). In New York, the ICE Arabica contract for December delivery, after Monday’s slight decline, deepened losses on Tuesday, falling a further 545 points (1.4%) to close at 367.95 cents. In contrast, London rose following Monday’s market closure for the Summer bank holiday, with the contract for November delivery gaining 0.9% ($40) to settle at $4,690.
The return to negative territory in New York at the start of this week was also triggered by technical factors.
“The market was showing signs of overbuying, indicating some correction,” pointed out Gil Barabach, a consultant at Safras & Mercado. However, commercial, logistical and production tensions remain intact.
According to Safras & Mercado’s latest update, the Brazilian harvest was 100% complete for Robusta and 98% complete for Arabica as of 20 August.
Meanwhile, StoneX has revised its estimates for Brazilian production downwards due to a smaller-than-expected Arabica harvest. Meanwhile, Fundação Procafé has reported early flowering in some areas of Minas Gerais and São Paulo.
Without adequate backup showers, this could result in floral abortion and loss of crop potential. According to a Pine Agronegócios report, this year’s climatic stresses could hinder the recovery of crops in time for the next harvest cycle.
The executive director of the International Coffee Organisation, Brazilian Vanusia Nogueira, said that U.S. tariffs, climate issues and Brazil’s lower-than-expected Arabica harvest are the factors behind the recent surge in prices.
Nogueira was speaking at an event organised by the National Federation of Coffee Growers of Colombia in Bogotá.
She explained that market volatility remains high given the increase in consumption and the reduction in stocks, adding that the global market has been in a supply deficit for years (it should be noted, however, that the ICO still forecasts a slight surplus for CY 2024/25, ed.).
There is also pessimism about the possibility of a recovery in Brazilian production in the coming years.
‘We don’t know when production in Brazil will normalise, as we are faced with very severe weather events every year,’ Nogueira concluded.
