The Market Update explores how this week’s news, weather and other factors are shaping the global coffee trade.
Volatility remains the real constant. We have already traded a 2000-point range in October as we settle 375 today, basis Z25.
Good flowerings across Brazil’s coffee belt have been widely shared and are indeed positive news. However, flowers are a long way from harvested coffee for export.
The bigger question is perhaps what will be the tariff on Brazilian coffee, as talks between presidents took place this week. For now, the deadlock on a 50% tax remains in place.
Elsewhere, the battle of the differentials between origins seems to heating up, as the origins play a game of “What is their tariff versus mine” and adjust math differentials accordingly. We see huge demand for new-crop Mexico, as diffs rally higher daily.
Moving on, new-crop Centrals are still four to five months away from shipping, and spot stocks look to be at an all-time low, as importers look to limit inventory, given the trifecta of high interest rates, huge tariff charges and a 1600 inversion impact.
Positive news: We’re seeing more and more Africa offers and even revivals from Burundi and Uganda, as fair prices and smaller tariffs make a big difference.
Stocks will remain small and potentially shrink further. Planning remains key and/or booking forward to be assured of supplies. —N.B.
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