MILAN – The bull run continues for coffee futures, pushing both markets to new all-time highs. Yesterday, Wednesday 27th November, both London and New York saw strong gains. January Ice Robusta coffee rose 6.9% (+$358) to close at $5,533, an all-time high for the 10-tonne contract, although the intraday high of $5,552 remains below a record high of $5,575 set on 26th September.
Ice Arabica coffee futures contract for March delivery, in turn, gained 14.2 cents (+4.6%) to settle at 323.05 cents, its highest level since 1977.
Those who expected a day of respite in the coffee futures markets before the Thanksgiving break were resoundingly proved wrong.
The fundamental picture remains precarious, with declining harvests, downwardly revised estimates, logistical and regulatory problems, and very low global inventories, as demand remains buoyant.
The situation is exacerbated by coffee roasters trying to secure supplies ahead of likely shortages and uncertainty over the status of a new EU law on deforestation.
Negotiators plan to meet for another round of talks on 3 December, with a last chance to adopt the proposed delay to the EUDR at the mid-December plenary before the year-end implementation deadline.
“I have never seen anything like this before,” said Tomas Araujo, trading associate at brokerage StoneX in an interview with the Financial Times. “This is not going to be resolved this year and that’s why the roaster has started going into panic mode.”
In Brazil, producers have now sold (according to estimates) 70% of this year’s crop and seem to be in no hurry to put the rest on the market, given the trend in domestic and international prices (the CEPEA/ESALQ indicator for Arabica type 6 has risen by more than 30% since the beginning of the month, ed.).
Trader Sucafina said fears producers might default or delay deliveries coupled with increased hedging costs – due to pricier margin calls – are leading to panic, tempting traders to close out their hedges by buying futures. When will the rally stop?
“The market will stop rising when the long speculator decides to take profit” says Sucafina. “We approximate that happening somewhere between $3.15/lb and $3.50.”
Meanwhile, the development of the new crop in Brazil continues to be closely monitored by insiders. ‘
“In the Cerrado Mineiro region, the flowering was excellent, but the fruit set is worrisome,” said Juliano Tarabal, head of the Federation of Cerrado Coffee Growers, during the International Coffee Week (SIC) in Belo Horizonte. “We don’t have estimates yet, but the situation isn’t encouraging,” he added.
Similar considerations came from Juliana Mello, Secretary of the Association of Coffee Growers of Southwest Minas.
“The flowering was generally beautiful across almost all regions of the state. Ours was no different, but the plants are extremely stressed,” Mello said.
“If the plants are heavily defoliated during flowering, they sometimes prioritize leaf regrowth over producing beans to ensure survival. We’re already seeing this happen.”
Therefore, Mello predicts that the 2025/26 harvest will be between 20 and 30 per cent lower than initially expected, and the situation could be even worse, since coffee trees often drop young fruit in January due to heat stress, which could further impact productivity.
The situation looks better in Chapada de Minas region, in northeastern Minas Gerais. According to Luís Manuel Martins, director of the Chapada de Minas Coffee Institute (ICCM), flowering and fruit set in this area were both excellent. And everything bodes well for a very abundant harvest.
