Coffee futures prices have skyrocketed since early August, with DEC25 ICE NY arabica futures climbing from a close of 277.55 c/lb on 1 August to 418.20 c/lb as of the time of publication, according to Expana (Customer access only). These market levels are creating financial strain across the supply chain, with Brazilian exporters holding warehoused coffee that has required substantial variation margin payments throughout the rally.
Expana’s domestic market analysis in Brazil reveals farmgate to FOB differential spreads remain unchanged, signaling farmer selling activity continues at limited levels. Low grade arabica values are displaying weakness against conillon, indicating potential substitution patterns from arabica to robusta. Weather developments remain the primary market factor with precipitation forecast across arabica and conillon production zones, although sustained rainfall will be necessary beyond current projections. Brazilian August shipments reached 3,142,015 bags, surpassing original estimates, while July exports received upward adjustment to 2,745,000 bags. Certified arabica inventories in exhange warehouses continue to draw down as roasters look to secure beans available, with farmers unwilling to sell at these high price levels.
Vietnamese old crop export volumes followed seasonal weakness during August. July green coffee shipments totaled 1.2 mn bags, registering 8% year/year gains while tracking below five-year averages. Coffee product exports established record performance at 469,000 bags GBE, advancing 75% year/year and marking the seventh consecutive month of record product shipments driven by expanded processing capacity addressing EUDR regulatory compliance. Cumulative 11 month green coffee exports for 2024/25 reached 20.6 mn bags, gaining 1% year/year.
Inventory levels indicate HCMC stocks closed August at 1.8 mn bags, declining 0.3 mn bags from July while maintaining 0.5 mn bags above prior year levels. Producer stocks contracted 29% month/month to 1.7 mn bags, equivalent to approximately 6% of the 2024/25 crop retained at origin. Upcountry inventories decreased 0.6 mn bags to 0.6 mn bags, with warehouse facilities maintaining roughly 1% of crop supplies while allocating storage space for fertilizer inventory.
Image source: Adobe
Written by Andrew Moriarty
