Coffee Market Commentary - June 9th, 2025
How much change is too much change?
It’s good for the coffee industry to always be evolving. We must continue to adapt and adjust to comfortably and successfully sustain all links in our supply chain. But as of late, it seems like the sector has been hit with change after change, leaving us wondering how much more we can take and what exactly the impact will be.
We know we have EUDR coming down the horizon. This will be a big change that has already taken a lot of preparation and modifications. Tariffs will cause changes both in prices and availability of coffee from certain origins.
The InterContinental Exchange (ICE) announced a major change earlier this year when, effective with the May 2027 expiration, they added Vietnam as a deliverable origin on the "C" futures contract, at a differential of 6 cents per pound under par.
And yet we digested all the change. We took it all in stride. We pressed on.
Now, ICE has issued yet another major change for the “C” contract. Last week, they circulated a notice that stated that effective immediately, the Exchange will pause the listing of new contract months in the Coffee "C" futures and regular Monthly option contracts and will introduce new Arabica Coffee futures and options contracts that are priced in Metric Tons later this year.
Additionally, the new futures contract will allow for coffee to be stored in Flexible Intermediate Bulk Containers (commonly referred to as "FIBC's").
So, what does this mean? For converting Arabica futures and options contracts from their current pricing of cents per pound to metric tons, the math should be straightforward. The formula of multiplying the current price by 22.046 to find the new price in metric tons sounds simple enough, however, industry professionals have expressed concerns both for the comprehension of producers and the orderly and efficient updating to automated systems. Teaching producers the new “pricing format” will be critical and ensuring the CRM systems are properly converted is crucial.
The second part of the move by ICE involves allowing “big bags” for storage of certified stocks. While this was a logical move, as big bags are both more cost effective and easier to move around, the impact on certified stocks is unknown. As of now, it doesn’t seem possible that you could certify half of a big bag, implying that only entire FIBCs will be certified. This could mean either a massive surge or dump of certified stocks, as we will be dealing with much larger quantities of coffee eligible for certification.
As an industry, we are resilient. We have braved recessions and inflation, weather phenomenon, global pandemics and agricultural disease outbreaks. We will adapt to whatever change comes our way, even if it means having to break out the calculators.
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