Stock Recovery Pressures Prices, but Reduced Supply May Sustain Values

The recent increase in ICE-monitored arabica coffee stocks has exerted significant liquidation pressure on futures contracts, leading to notable price declines. A 2.7% rise in stocks over the past two sessions, reaching 779,063 bags, has contributed to the perception of greater short-term supply availability, causing contracts to retreat substantially. The March 2025 contract fell by 2,215 points, closing at 395.75 cents per pound, while the May 2025 contract dropped by 5.34% to 389.90 cents per pound. Robusta also followed this trend, recording losses of up to $115 per metric ton, reflecting the market’s reaction to the increase in robusta stocks.

Despite the downward pressure on prices, the long-term outlook still suggests potential price support due to the expectation of a smaller Brazilian crop in 2025/26. According to Pine Agronegócios, production is expected to decline by 8% compared to the previous season, reaching 59.75 million 60-kg bags, impacted by last year’s drought and greater-than-expected pruning of coffee trees. This reduction in supply may limit further sharp declines at the onset of the harvest, especially if domestic consumption and exports remain steady. Additionally, the actions of speculative funds could influence market volatility in the coming months.

In the domestic market, prices mirrored the declines on the exchange and ended the day with significant devaluations. Type 6 arabica coffee recorded drops of up to 5.60% in Machado, Minas Gerais, reaching R$ 2,530.00 per bag, while peeled cherry experienced reductions exceeding 4% in various regions. The pressure from the external market, coupled with expectations for the upcoming harvest, reinforces uncertainty among producers, who will need to carefully assess the best timing to market their production amid price fluctuations.

Fonte: Noticias Agrícolas Preços do café arábica caem para uma baixa de 2 semanas no fechamento da... - Notícias Agrícolas