MILAN — Coffee futures are flying again and if at the turn of the week it was mainly London that set the pace, yesterday – Tuesday 22 January 2025 – New York also went into orbit, reaching unprecedented levels. ICE Arabica’s March contract rose 1,405 points (+4.3%) in a single session to close at a new high of 341.85 cents, although still below the intraday record of 348.35 cents set on 10 December.
Continuing a rally that began last Friday, Ice Robusta (March) gained $563 (+11.5 per cent) in three sessions, including $189 (+3.6 per cent) in yesterday’s session, to close at $5,452, nearing the contract highs set last September.
The overwhelming rebound seen on both contracts confirms the vulnerability of the coffee futures markets to bullish speculative manoeuvres and the continuing precariousness of the balance between supply and demand.
Yesterday’s flare-up was partly fuelled by the publication of the new Conab survey on Brazil’s 2024/25 crop, which offers an even more pessimistic picture than the one it described last September.
Brazils’ National Supply Company always tends to understate estimates, which means that its figures should always be taken with a grain of salt.
However, the fact that Conab has further cut its figures that were already well below those of other analysts, who have themselves all lowered their estimates in recent months, is not a reassuring sign.
Reports from Brazil itself and Vietnam added further fuel to the fire.
In Brazil, the indicators of the Cepea Institute of the University of São Paulo recorded new record prices in the domestic market. Cepea also reported that farmers are delaying coffee sales as they hold out for even higher prices.
In Vietnam, coffee growers are also waiting for better prices before they sell their supplies, according to Sucden Financial.
On top of that, a sharp slowdown in trade and shipping is expected at the end of January, coinciding with the Lunar New Year celebrations.
Meanwhile, logistical problems continue to make the movement of goods more expensive and complex.
Fortunately, there is some good news on this front: with the start of the ceasefire in Gaza, the Houthis have also announced a truce in their attacks on merchant ships sailing through the Red Sea, a mandatory transit area for all ships entering or leaving the Mediterranean via the Suez Canal.
Of concern, however, is the aggressive trade policy of new US President Donald Trump, who is threatening punitive tariffs and various retaliatory measures left and right.
Finally, the sword of Damocles of the Eudr, whose entry into force has only been postponed, hangs over the European market.
But the biggest unknown remains the climate change that threatens the sustainability of crops and the work of tens of millions of producers. The importance of a collaborative approach across the supply chain is becoming increasingly clear in order to tackle the common problems facing the sector in the long term.
Initiatives such as the Global Coffee Resilience Fund promoted at the recent G7 Development Ministers’ Meeting in Pescara under the Italian Presidency go in this direction. The ambition – as Italy’s Foreign Minister Tajani stated – is to ensure that this initiative, which combines public and private sector efforts, can become ‘a pilot model for other agro-industrial sectors’.
