Although it had been anticipated that prices might come under pressure this week following the lifting of tariffs on imports of Brazilian coffee into the US, concerns about continuing dry weather in Brazil outweighed those considerations forcing prices upwards. There is also some concern that the recent typhoon in Vietnam may delay the harvest there by a couple of weeks, although the coffee industry there appears to have escaped relatively unscathed. It was not all plain sailing however and there was some volatility, but arabica coffee prices finished the week 11.75 cents/lb higher, with the second position (March) closing at 381.20 cents/lb. Robusta coffee prices followed suit gaining $212/ton (12.85 cents/lb) with the March position closing at $4,413/ton. In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be between 90 and 95 toea/kg higher than they were last week.
The Brazilian meteorologist agency Somar reported this week that the largest arabica producing region of Brazil, Minas Gerais, received just 36.4mm of rainfall last week, this is around 49% the historical average. The forecast for the week ahead is not much better but the longer-range forecasts suggest that there may be significant rainfall around the second week of December. The issue is however whether the rain will come into time to stop the trees from aborting any flowers or buds that that developed. Only time will tell. The European Parliament approved a further 1-year delay to the implementation of the EU’s Deforestation regulations (EUDR) which was due to start on 31st December 2025 to 31st December 2026. The hope is that this decision to delay will enable the EU to refine its procedures and systems so that when it is finally introduced it will not cause the disruption that many believe it will. Indeed, drastic changes are required to ensure that it does not impact unfairly small producers who will find it impossible to comply with this rather cumbersome and onerous legislation. It was reported this week that Colombia’s coffee production fell during the second half of the year and that total output in 2025 is now expected to reach about 13.312 million bags, down from almost 14 million bags in 2024.
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 quotations are somewhat erratic at the moment, and various quotes are possibly unreliable. It appears that Brazilian 3/4’s, are firmer at minus 22; Honduras HG’s are slightly lower at plus 5, Kenya AB FAQ’s are quoted at between plus 25 and plus 40; while Colombian UGQ’s are being quoted at between plus 16 and plus 20. I can only guess that PNG Y1’s might be unmoved at around minus 10, but I must stress that this just a guess. Thus, had an exporter fixed on Friday in New York for March delivery he may have been able to secure a price somewhere between 367.75 cents/lb and 375.00 cents/lb. Whilst the increase seen this week is certainly welcome, it is also very clear that there remains considerable uncertainty over how the crop is developing in Brazil and indeed also elsewhere. This will not change anytime soon ensuring that the market remains volatile not only into next week and also most probably for some time to come as things are unlikely to become clearer until well into the New Year. The dry weather in Brazil is a serious concern and thus may push prices higher next week, but any increase is likely to be relatively small.
Source:
Mick Wheeler, UK.