Coffee Market:
Arabica coffee rose 3.0% to 384.40 cents per pound, while Robusta closed the week up 0.4%, at $5,353 per ton.
The lack of rainfall in Brazil throughout March increased volatility and led to a significant rise in New York futures contracts. Initially, rains were expected only in the second half of the month, but updated forecasts anticipate rainfall starting on Thursday, the 13th.
During the week, Colombia reported its February coffee production, which reached 1.36 million bags, a 42% increase compared to the same month in 2024. Over the past 12 months, production totaled 14.8 million bags, marking a 17% rise from the previous year. This is the highest 12-month production level since 1996.
Vietnam released its February coffee export data on Tuesday, showing shipments of 2.83 million bags, a 6% increase compared to the same month in 2024. However, total exports for January and February reached 5.06 million bags, representing a 24% decline from the same period last year. While February’s growth suggests a slight recovery, the slower export pace may signal weaker global demand. This is further supported by below-average differentials for this time of year, indicating price pressure and a potential reduction in consumption.
Financial Market:
Investors remain highly uncertain about potential tariffs imposed by the U.S. government. Over the weekend, markets weighed the possibility that these measures could trigger a recession in the world’s largest economy. Additionally, leading GDP indicators and job creation data came in below market expectations, increasing the likelihood of the Federal Reserve cutting interest rates sooner than anticipated.
Meanwhile, the Dollar Index fell 3.5% during the week, marking its worst weekly performance since October 2022.
The eurozone economy performed slightly better than estimated in the fourth quarter of 2024, with GDP growth of 0.1%, surpassing the initial forecast of stagnation. Compared to the previous year, growth was 0.9%, the same as in the previous quarter but still modest.
The European Central Bank (ECB) announced on Thursday, the 6th, a 0.25 percentage point reduction in its key interest rates, effective March 12, 2025. The new benchmark rate will be 2.50%. The decision was based on a revised inflation outlook, which the ECB considers to be “well on track.” Headline inflation is expected to be 2.3% in 2025, decreasing to 1.9% in 2026 and 2.0% in 2027.
Analysis by Adelso Zamprogno, trader at Royalty Coffees.
