The Market Update explores how this week’s news, weather and other factors are shaping the global coffee trade.
It’s been another rollercoaster ride in coffee. Week on week, we’ve ranged 288 >324 basis U25.
Tariffs played a part, but given everything happening in the origins, the market’s reaction was relatively subdued.
The 50% tariff on Brazil is the monster under the bed, and real clarity over what Colombia and many other core blend component origins will be remains murky.
A cold spell brought some damage — and pricing volatility — to Brazil, namely in the Cerrado region. The amount of damage appears to be quite isolated, but this is another layer of potential problems as any bags lost to frost will continue to affect the overall S&D balance sheet.
Elsewhere we see differentials firm and demand for spot coffee growing. We anticipate further shrinkage of available spot coffee as importers navigate the extra costs attached to importing (anything).
Volatility and uncertainty are the overriding message — we hope or pray for relief on certain origins and tariff impacts.
Inversion between U/Z remains deep at 700 points. The coming days offer a warmer and clearer weather picture in Brazil.
– Neil Barwick, Managing Director
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