A much quieter week than of late with both markets only experiencing relatively small movements on each day. Arabica coffee prices started off the week on a positive note but meandered thereafter to end the week gaining 2.30 cents/lb, with the second position (July) closing at 387.75 cents/lb. The robusta market was closed on Monday and followed the meanderings of the arabica market for the rest of week so consequently finished the week lower losing $30/ton (1.35 cents/lb) over the week. In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be between 15 and 20 toea/kg higher than they were last week.
The lack of volatility seen this week was something of a surprise given that CONAB issued its second forecast of the Brazilian crop this week. They estimate that Brazil’s 2025/26 coffee crop will total 55.7 million bags, with arabica output at 37 million bags and robusta (conillon) at 18.7 million bags. This is 2.7%, or 1.5 million bags, higher than the volume produced in 2024. They do however note that the harvest, which began in March was only 3.6% complete when their survey was undertaken so it was still in its early stages and thus their estimate remains preliminary. They estimate that the total area dedicated to coffee farming in 2025, including both producing and developing areas, totals 2.25 million hectares, an increase of 0.8% compared to last year. By way of contrast the consulting firm Safras & Mercado raised its Brazil 2025/26 coffee production estimate this week to 65.51 million bags from an earlier estimate of 62.45 million bags. There have also been a few more estimates released by the USDA this week with Uganda’s output for 2025/26 put at 6.875 million bags, up 175,000 bags on last year’s production. Honduras is put 5.80 million bags up 280,000 bags on last year. Whilst none of the estimates have suggested a massive increase in global output all the estimates released so far suggest that global output will be higher next year
I still cannot get access to any reliable regularly-published data on price differentials, so once again, I have had to use sources, the accuracy of which cannot be guaranteed. Physical price differentials are, by and large, very similar to what they were last week, but the situation is mixed. Brazilian 3/4’s are higher at minus 13; But Honduras HG’s are steady at plus 3, as are Kenya AB FAQ’s at between plus 20 and plus 25; and Colombian UGQ’s are also unmoved at plus 5. I can only assume, therefore, that PNG Y1’s are also the same as last week at around minus 4, but, as always, this is just a guess. Thus, had an exporter fixed on Friday in New York for July/August delivery he may have been able to secure a price somewhere between 381.20 cents/lb and 387.20 cents/lb. It was reported this week that retail prices in America have reached another record high at $7.385/lb in March, the highest on record in the series which started in 1980. Inevitably this will soon start to take its toll on consumption as record retail price highs are being reported in a number of other countries as well. Furthermore, the IMF reported this week that while global inflation will continue to fall, global growth is also projected to drop to 2.8% in 2025 and 3% in 2026. The longer-term outlook therefore does not look good. However, the increase in arabica coffee prices seen this week, albeit very small, is encouraging and suggests that we might see more stability next week and maybe even another small increase.
Source:
Mick Wheeler, UK.