Coffee
Current market conditions as of 21/05/2025:
Robusta coffee prices on the ICE London futures exchange began a multi-year rally in 2023, peaking in late 2024, driven by poor weather conditions in Vietnam – the world’s top grower – as well as speculative buying, robust consumer demand and several successive poor crops. As a result, prices rallied to their highest point ever, topping $5,600/mt on the front month in February 2025. Since this point, prices have fallen, but remain at very elevated levels. Some of this price strength has been supported by a weaker USD following the announcement of broad tariffs on all US imports in April 2025. As the USD weakens, commodities traded in dollars, such as coffee, become more expensive.
Production forecasts for the upcoming Vietnam crop later in 2025 have pegged total production at levels above the last several crops, with some sources telling Expana that they expect a roughly 15% uplift compared to the 24/25 crop due to more favourable crop conditions. With rainfall and soil moisture slowly improving in Brazil, many market participants are expecting an upcoming Brazil conilon (robusta) harvest of around 22-23 million 60kg bags, in line with the ten-year average. Certified inventories in consuming regions such as Europe have started to rebuild as high prices mean that many Latin American origins are now at tenderable parity, particularly in arabica. Several market participants have stated that although they are bearish on prices based on the improving conditions in Vietnam, widespread uncertainty over the impact of US tariffs on US consumption, as well as availability of supplies to US-based roasters, seems likely to persist.
Forecasting insight
Both Arabica and Robusta coffee prices have experienced a decline over the past couple of months, aligning with the typical seasonal weakness observed in the first quarter. Looking ahead, the market is expected to remain volatile throughout the second quarter as it responds to ongoing geopolitical developments, particularly the anticipated decisions surrounding tariffs.
Demand is projected to soften in light of record-high prices, which is likely to contribute further to the current downward trend. While adverse weather conditions in locations such as Vietnam have been a key cause in driving price higher, remain a concern, the primary factor influencing price movement at present appears to be demand destruction. Another key consideration is the macroeconomic outlook; should the United States enter a recession, this would place additional downward pressure on coffee prices.
From a technical perspective, Robusta has been in a long-term uptrend over the past several years, largely driven by severe weather events which have resulted in supply shortages. However, short-term technical analysis indicates that both markets are currently in a downtrend. This may suggest the early signs of a significant price peak, either one that has already occurred or one that may materialize later in Q2 or possibly Q3.
There could be an opportunity to hedge what may be the final leg of the long-term price increase. We will continue to monitor market developments closely to assess the validity of this scenario and to inform any necessary adjustments to our hedging recommendation.
Reminder: The data, content or information provided herein shall (i) not constitute an inducement or encouragement to invest in any commodity, product, financial product, security, derivative, hedging product or otherwise and (ii) not constitute advice in any form whatsoever (including but not limited to hedging, market movements or otherwise). All data, content and information herein provided is provided on an "as-is" basis, and you are responsible for the conclusions drawn or the decisions made in respect of the same. This data is the copyright of Expana, its affiliates and their respective licensors.