
Jan 31
/
Laleska Moda
As supply show no sign of improvement, Arabica future prices reach new record
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- This week, the March 25 Arabica contract surpassed the 370 c/lb mark in New York as supply concerns intensified. Exchange data shows that some of the world's top roasters are underbought. The Arabica rally also supported Robusta prices, with the March and May 25 contracts trading above USD 5,700/mt.
- Conab's first estimate for the 25/26 Brazilian crop, released on Tuesday, reinforced the lower availability of Arabica next season. Our models also show a slight decrease in Arabica availability, however with the expected recovery on the Conilon side, we could still see a crop similar to the 24/25 cycle, with a total of around 64 M bags.
- On the other hand, beginning stocks are expected to be at their lowest levels, while Brazilian producers are likely to hold their remaining beans in the first half of 2025, increasing concerns about availability, supporting prices, and widening Brazilian differentials.
- This scenario in Brazil and lower global coffee stocks is also leading growers in other origins, such as Vietnam, Central America, Colombia, and India, to hold back sales, adding pressure to the market.
As supply show no sign of improvement, Arabica future prices reach new record
Coffee prices continued their rally this week as the March/25 Arabica contract broke through the 370 c/lb barrier on Thursday. On Friday, the contracts even reached the 380 c/lb mark, but settled at 377.9 c/lb, setting a record for the variety. Arabica prices are already up more than 15% for the first month of 2025. Robusta futures were also pushed above 5,700 USD/mt, surpassing levels seen on 24 November, as supply concerns intensified.
Despite improved weather in Brazil since October/24, there is a consensus in the market that the 25/26 Brazilian crop will see a decline in Arabica production and that supply will be limited in the first half of 2025. ICE certified stocks also fell this week, particularly for Arabica, and remained below average. In addition, recent exchange data shows that some of the world's top roasters are underbought and in need of coffee, while speculative funds remain bullish, adding to fears of a shortage in the market.
Conab's first estimate for the 25/26 season, published on Tuesday, 28, also added to the pressure. According to the company, while Conilon production is expected to rise to 17.13 M bags (+17.9%), Arabica production will fall to 34.68 M bags (-12.4%), resulting in a total crop of 51.81 M bags, down 4.4% from 24.25. Although Conab's figures are usually lower than the market's, the decline has exacerbated supply fears.
Brazil: Conab – Arabica Production (M bags)

Source: Conab
Brazil: Conab – Conilon Production (M bags)

Source: Conab
On the other hand, our models, while indicating a decline in Arabica, suggest a production similar to that of 24/25. Taking into account current producing areas, average temperatures, and cumulative rainfall up to January, we could see a 4.9% decline in Arabica production in 25/26 to 41.1 M bags, but a 14.3% recovery in Conilon to 23 M bags, leading to an overall crop of 64.1 M bags in this next cycle (+1%). However, we must point out that initial stocks are expected to be at their lowest level in years and could limit exports in 25/26, at least on the Arabica side, supporting prices.
Brazil: Hedgepoint – Arabica Supply and Demand (M bags)

Source: Hedgepoint
Brazil: Hedgepoint – Conilon Supply and Demand (M bags)

Source: Hedgepoint
In this sense, it is important to highlight the Brazilian farmer sales figures from last week: Arabica 24/25 crop sales are already at 82%, while Conilon is at 91%, both above the previous crop and the average. Farmers in Brazil are indeed capitalized and show little interest in new sales, even at high differentials - the Brazilian fine cup is even higher than most Centrals.
This picture is also leading farmers in other origins such as Vietnam, Central America, Colombia and India to hold back sales in anticipation of new highs, adding to the pressure on the market. In the case of Vietnam, it is also worth noting that sales are also affected by the Lunar New Year holiday.
While there is an increase in concerns regarding current price levels and their possible effects on demand, there has been no sight yet of a weakening. However, we do expect some changes in the next months, with a likely increase in demand for Robusta this year, as arbitrage levels are widening again (see previous analysis).
In Brazil, with current spread of Arabica and Conilon prices, its also expected a decrease in the use of Arabica in the domestic mix, leading to an increase in Conilon demand in the next cycle.
LN Robusta (USD/mt), NY Arabica and Arbitrage (c/lb)

Source: Refinitiv, Hedgepoint
Arabica Differentials (c/lb) ouuuu ICE certified

Source: Refinitiv, Hedgepoint
In Summary
Coffee futures continue to rally this week, reaching a new record. Current fundamentals point to tightening supply in the coming months: farmer sales levies in Brazil are above average, suggesting low availability; certified stocks are below average; and the Brazilian 25/26 Arabica crop is expected to decline. Farmers from other origins are also showing little appetite for new sales, while recent exchange data suggests that demand has not weakened this year, and roasters are short and likely to need coffee.
This suggests a supportive scenario for prices, at least until the 25/26 crop is harvested in Brazil. Arabica futures have already hit the 370 c/lb level this week and, given the fundamentals, could test higher levels, approaching 400 c/lb. On the other hand, while robusta futures are also rising, the arbitrage between the two continues to wide, which could lead to a fall in Arabica demand in the face of robusta.
Weekly Report — Coffee
Written by Laleska Moda
laleska.moda@hedgepointglobal.com
Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com
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