The price of robusta and arabica has dropped significantly in the last week, largely because of higher-than-expected ICE stockpiles, leading to liquidation. However, both Arabica and Robusta beans have seen big recent fluctuations in their market prices, and there are many factors to consider for the global coffee market’s surge in prices in recent years.

Although coffee prices have been consistently rising over the past few months, an increase in global coffee supplies seems to be undercutting prices. Now it appears that the global coffee exports of October 2023 to March 2024 were up +10.4%. ICE-monitored robusta coffee stocks reached a 5-month high on Friday and ICE-monitored arabica coffee inventories reached a 1-year high on Friday. This rise in ICE coffee supplies has reduced supply fears and pushed the coffee prices lower from the high levels it had reached in April.

In the past month, coffee prices have faced volatility as a result of crop distress in Vietnam and Brazil. Vietnam’s agriculture department projected the smallest crop in four years due to drought. Meanwhile, Brazil’s coffee regions reported no rainfall in the last weeks, negatively impacting coffee crop production. Even though the coffee belt of Vietnam may begin to recover this month from the drought, speculative trade positions by funds have resulted in further price gains. Based on recent statistics from the Commodity Futures Trading Commission, hedge funds and other speculators have increased their bets on arabica prices rising. In fact, Robusta London futures have climbed in the past six months, which could eventually reflect on consumer costs. According to Carlos Mera, head of agricultural commodities at Rabobank, this has intensified current supply control and raised concerns among roasters about a worldwide shortage, leading to a purchasing frenzy. Unsettlement about the supply chain had already led roasters, particularly in Europe, to try to build up their inventories. This was also influenced by the Houthi militant attacks on ships in the Red Sea, which since November have led ships sailing between Asia and Europe to take a longer path around the Cape of Good Hope rather than via the Suez Canal.

The last few months have been significantly volatile for coffee trade. Very recently, improvements in coffee inventories have pushed down prices, but crop distress challenges
due to erratic weather patterns are still looming. Moreover, geopolitical impacts on logistics have created further uncertainty. Hence it will be interesting to see how the market
progresses in the coming weeks and months. Feel free to reach out to us in case you have any questions or concerns; we are here to help.