Coffee Market:

Arabica coffee fell 1.9% to 377.20 cents per pound, while Robusta closed the week up 0.8%, at $5,397 per ton.

Futures remain volatile due to weather conditions in Brazil and financial uncertainties. Demand for coffee has declined as high prices lead roasters to reduce purchases. The market is struggling to balance supply difficulties with weaker demand, but the lack of available coffee limits adjustments.

Dry weather and high temperatures in Brazil continue to raise concerns, adding to price volatility. Recent rainfall has not eased fears, and market attention is now focused on the coming week. Limited physical availability is reducing market liquidity, with exporters covering their positions.

In Colombia, internal coffee flow remains low due to the off-season and logistical challenges. The drop in New York prices below 400 cents per pound has led sellers to withdraw from the market, tightening Colombian coffee differentials. The country’s coffee production reached 14.8 million bags, the highest 12-month volume since 1996.

In Guatemala, trade activity has picked up as producers increase deliveries. Recent rains have supported flowering, though it is too early to assess the potential of the next crop. Guatemalan coffee differentials have firmed, but there remains a wide gap between buying and selling expectations.

In Honduras, over 75% of the harvest has been completed, with most coffee still in dry parchment. Producers are holding back sales, anticipating a potential price increase.

Limited physical availability of Robusta coffee in Vietnam continues to support prices. Additionally, weather conditions in Vietnam are drawing market attention, as this period is crucial for flowering. Meanwhile, in Indonesia, climate conditions remain favorable for crops in their final development stage.

Financial Market:

Throughout the week, the U.S. dollar experienced volatility driven by global uncertainty. The currency initially strengthened due to concerns over potential protectionist measures from the U.S. government and upcoming inflation data. However, as the week progressed, expectations of a potential recession in the U.S. led to a shift in sentiment, weakening the dollar globally.

By midweek, geopolitical tensions and uncertainty surrounding U.S. economic policies added to market caution, though a mild recovery was observed. Towards the end of the week, the dollar faced further losses as negotiations to end the Russia-Ukraine war progressed, and investors sought alternative markets amid trade policy uncertainties. As a result, the dollar closed the week with an overall decline, marking a shift in global investor sentiment.

Analysis by Adelso Zamprogno, trader at Royalty Coffees.