The Market Update explores how this week’s news, weather and other factors are shaping the global coffee trade.
It’s another volatile week, as coffee rallies 2000 points higher.
Market basis Z25 has ranged from 375–405, settling today at 399. Further drawdown of certified stocks is tightening available spot coffee and adding pressure to the inversion, with Z/H widening to 2200. The deeper the inversion — realistically — the smaller the availability of spot or nearby stocks.
Talks regarding Brazil tariffs have so far had no impact on the current 50% tax. Flowering in Brazil looks good and we pray these flowers translate into a good harvest ahead.
Elsewhere, differentials remain fully firm to higher as demand for the lower-tariff origins increases.
Peru is closing and looks very well sold. Honduras is still some months away from the new harvest, and offers remain thin.
Mexico is heavily sold ahead of January new-crop shipments, as the tariff-free prices have encouraged roasters to buy forward. Costa Rica and Guatemala report good crops for Jan/Feb onward.
It’s too early for a qualitative assessment, but we hope no delays or hurricanes impact this settled environment.
The supply and security of booked coffee going forward are becoming critical as spot availability decreases. We continue to advise: Planning is key. —N.B.
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