The Arabica market is currently displaying some resilience, bouncing back from a six-month low at 155.50. While it is too early to confirm a trend reversal, the first requirement for a turnaround is for the price to cease its downward trajectory. Factors such as weaker differentials from CA and Colombia, favorable harvesting weather, and the absence of cold weather in Brazil have influenced market sentiment negatively. Moreover, many consuming countries have experienced a hot summer, leading to concerns about sluggish consumer demand. Short positions have been adopted by some traders, but the overall chart shows consolidation, indicating a neutral outlook.

Local Market: The Arabica sector witnessed a relatively calmer week as futures reached new lows, leading to lower farmgate prices. Considering the substantial coffee volumes traded in previous weeks, a temporary reprieve was anticipated. According to Cecafe data, Arabica shipments have had a slow start this month, but an uptick is expected as the first new crop loadings make their way to the port. Meanwhile, Conilon coffee continues to be transacted at attractive differentials compared to September futures, and demand for it remains steady.

Weather: This week, there has been considerable discussion regarding a cold front passing through the coffee-growing regions over the weekend. While it merits observation, the situation does not raise any immediate concerns. Most global weather models predict cooler temperatures of approximately 5 to 6 degrees °C tomorrow morning in the southern and western parts of SDM and lower Mogiana in Brazil. However, these temperatures do not indicate any risk of frost or potential damage to the 24/25 crop.

ICE certified Arabica stocks remained unchanged at 545,000 mio bags over the week, with stock gradings matching the drawdowns. On the other hand, Robusta certified stocks continued their decline, reaching five-year lows at 5.4 thousand tonnes.

Export Market: Arabica demand persists due to attractive differentials and stable price levels, which continue to entice buyers looking to secure their positions. Meanwhile, Conilon coffee demand remains consistent as the market continues to seek cost-effective alternatives.
Back to blog