☕ Coffee Market
It was a week of sharp declines in the coffee futures markets. At ICE US (New York), the July/25 arabica contract closed at 365.65 cents/lb, down 5.7% on the week. At ICE Europe (London), the July/25 robusta contract settled at $4,865/ton, posting a weekly drop of 6.9%.
The week was marked by intensified downward pressure on prices, driven by the initial progress of the Brazilian harvest and a more optimistic outlook for the 2025/26 crop. Consultancy firm Safras & Mercado revised its estimates upward for Brazil’s coffee production, especially after fields showed recovery from the weather adversities faced in 2024. Robusta output is expected to be abundant, while arabica, despite declining compared to the previous crop, looks more promising than initially expected.
Despite the harvest having started, the pace remains below the historical average. According to Safras, 11% of the conilon and only 4% of the arabica had been harvested — both below last year’s levels and the five-year average. Sales from the new crop are also progressing slowly: only 16% of the 25/26 crop has been sold, compared to 20% at the same time last year and 27% on average. This slow pace is partly due to producers needing to sell less to cover costs, given the current price levels.
Certified stocks on the New York and London exchanges have risen again. Robusta stocks reached a seven-month high, while arabica hit a three-month high — although the overall supply situation remains tight.
On the demand side, export data released by Cecafé showed weakness: in April, Brazilian exports fell 28% compared to the same month last year. From January to April, exports were down 15% year-over-year.
From the perspective of funds and speculators, the latest CFTC report showed that net long positions in arabica declined from 49,341 to 46,070 contracts, indicating a slight pullback but maintaining a bullish bias in the market structure.
Financial Market
On the international front, the agreement between the United States and China to suspend tariffs for 90 days eased risk aversion and brought relief to the markets, boosting global equities. Nevertheless, a cautious tone remains after Moody’s downgraded the U.S. credit rating, removing its “AAA” status held since 1917. The agency cited persistent fiscal deficits of 6% to 7% of GDP per year and growing concerns over debt sustainability. The news led to a rise in U.S. interest rate futures.
President Donald Trump’s proposed economic plan — which includes new tax cuts — also puts further pressure on fiscal expectations, increasing uncertainty. Speeches by Federal Reserve officials this week will be closely watched amid signs that the era of ultra-low interest rates may not return soon. In Europe, inflation data from the UK and the ECB minutes will provide clues on the next monetary steps, while in Asia, attention turns to China’s interest rate decision and industrial production figures.
