Weekly Market Report – 12 July 2026

It was an unbelievably volatile week this week, with prices jumping up by amounts which have only been seen in the past when there was a frost.  But there was no frost and the volatility can be attributed to the fact that the New York Exchange Authorities (ICE) raised the margin requirements for trading coffee futures twice this week.  This caught many speculators off-guard forcing them to close out a reported over 4,000 short contracts on Monday.  This resulted in the massive spike on Monday when prices leapt up by over 48 cents/lb.  When margins were raised again later in the week prices gained another 38 cents/lb on Thursday.  As this was a purely technical situation, prices retreated quite rapidly, although arabica coffee prices still finished the week 33.05 cents/lb higher, with the second position (September) closing at 334.25 cents/lb.  The robusta market was not quite as volatile but still saw a gain of $136/ton (6.15 cents/lb) to close the week at $3,852/ton (September).  In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably between 300 and 310 toea/kg higher than they were last week.

The Commitment of Traders’ report released on Friday showed that speculators and the managed funds liquidated 4,625 short contracts during the week up until Tuesday, whilst leaving their overall long position almost unaltered. The net result is that they have increased their net long position by almost 4,300 contracts.  Thursday’s action will probably have seen an equal number of short positions liquidated as these players struggle to provide the liquidity now required to continue holding the positions they have taken.  Safras & Mercado reported on Monday that Brazil’s 2026/27 coffee harvest is 52% complete as of July 1, behind last year’s comparable level of 60% and the five-year average of 55%.  This has been supported by a report from CEPEA, a national Brazilian Agency which has reported that the harvest is only just above 50% in most area and that excessive rain is causing serious problems with drying the harvested crop.  Values on both markets also gained some support when the weather forecasting agency Rural Clima said on Monday that rain is forecast for much of Brazil during the middle of July, which could be “detrimental” to crops, including coffee. 

Once again, I cannot get access to any reliable regularly-published data on price differentials, so I have had to rely on sources which may not be entirely accurate or up to date.  Physical price differentials have, understandably, come under pressure this week with Brazilian 3/4’s lower at minus 20. Honduras HGs are steady at plus 25, as are Kenya AB FAQ’s at between plus 55 and plus 60; but Colombian UGQ’s are lower at plus 60. I can only guess, therefore, that PNG Y1’s will probably be steady at around plus 11/12.  If this is correct, then it should have been possible for an exporter to have fixed on Friday in New York for Sept/Oct delivery at a price somewhere between 329.60 cents/lb and 351.70 cents/lb.   Everyone appears to have been caught by surprise by Monday’s massive move upwards and I suspect also by Thursday’s big jump.  With such volatility it is difficult to make any sensible forecast of what might happen next week, especially as I have been wrong every week for the last four weeks.  Nevertheless, there is now increasing evidence that all is not going well with the Brazilian harvest, but whether that will be enough to force prices further upwards is difficult to say, although given that prices finished so much higher this week, I suspect not.  Consequently, I expect to see prices lower next week, but……!        

Source:
Mick Wheeler, UK

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