Coffee Market Commentary 3/17/25
Well, it has certainly been a wild ride. From record highs, the coffee market has appeared to attempt a correction lower in the last few days. This has triggered some roaster buying while we have seen selling from origin muted as they wait for prices to return above $4.00.
Last week, we saw industry professionals gather in Houston for the NCA convention, where they discussed the impact of higher prices, the continued market inversion, and external economic factors. There are just so many unknowns right now.
Fundamentally, we are focused on the final development stages of the 2025-2026 Brazilian crop. Adverse weather is said to have affected the Arabica crop, a primary reason for the record-high prices. The Conilon (Robusta) crop, however, is thought to be in excellent condition, and yields could be even more significant than initially anticipated.
No startling reports of significant damage have occurred in any of the other major producing countries. Colombia’s crop is still projected to be around 12-13 million bags, and while the crop in Central America was delayed, yields should be similar to last year.
So, with that said, do the record-high prices of the Arabica market indicate a supply shortage? A lot of that answer will have to do with demand. The trickle-down effect is already being felt, and prices to the consumer in key consuming regions like the US, Brazil, and the EU are already soaring. Economic uncertainties can make the average consumer jittery about personal spending. The consensus is that global demand will certainly be impacted.
In addition, while the flowering season showed promise, a lack of rainfall has hindered many flowers from developing into cherries. Though rainfall returned from November to mid-February, it was insufficient in recent days to support the final grain development stages. With the Arabica crop expected to be smaller than last year and supply-demand conditions remaining tight, market volatility is set to persist, further fueled by speculation about potential cold weather. The coming period will likely bring uncertainty as external factors shape the coffee market.
