The coffee market continues to captivate traders and industry stakeholders, with this week’s movements reflecting a dynamic interplay of supply, demand, and global market forces. From Brazil’s record-breaking exports to Ethiopia’s promising forecasts, here’s what you need to know.
Market Overview
The NY market opened the week with a surge in trading volume, reaching a striking 11.75 range within the first few hours. The critical level of 330c/lb was tested early, only to see the market close lower the next day, driven by light trading volume. Following the completion of index fund rebalancing, prices steadied just above the 20-day moving average at 320.56.
The week ended with prices at 328.35c/lb, reflecting a $1.4 rise. The tightening Bollinger bands highlight a battle between buyers and sellers around the 20-day moving average. Origin sellers seized opportunities above the 330 mark, adding to the volatility.
Net short traders are now closely monitoring the Mar-25 vs May-25 spread as we approach First Notice Day (FND).
Key Highlights
Commitments of Traders (COT) & Certified Stocks
- Non-commercials increased their long positions by 7,301 lots.
- Commercials boosted their long positions by 1,240 lots.
Global Origin Updates
- Brazil: Cecafe reported December exports at 3.8 million bags, with arabica contributing 3.4 million. Despite an 8.1% drop compared to December 2023, Brazil set a record high in 2024 with exports surging 28.5% to 50.44 million bags. However, infrastructure challenges and container shortages left over 1 million bags stuck in ports.
- Colombia: The FNC announced an impressive annual production of 13.9 million bags, marking the best harvest in five years. Favorable climate conditions and the adoption of resistant coffee varietals were key contributors. Yet, Colombian ports faced logistical bottlenecks similar to Brazil, hampering export efficiency.
- Tanzania: In a significant development, the Tanzanian government secured $1.2 billion to fund its Standard Gauge Railway, expected to enhance inland haulage for Congo, Burundi, Rwanda, and Uganda, improving coffee logistics to Dar es Salaam.
Production Forecasts for 2024/2025
- Ethiopia: 8.8 million bags (up from 8.7m in 23/24)
- Kenya: 790k bags (unchanged)
- Tanzania: 560k arabica bags (up from 470k in 23/24)