Mar 28 / Laleska Moda

European Coffee Stocks fall in February

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  • The latest data by ECF (European Coffee Federation) shows a decrease in coffee stocks in the EU last month. While the figures are above 2024, they are still way below average levels and one of the lowest volumes in decades.

  • The drop was likely a reflection of a slower pace of imports. Net import figures showed a sharp decrease in January and February, below 2024 and average levels. This movement could also lead to a reduction in consumption in the bloc.

  • Growing signs of demand weakness combined with the expectation of further increases in consumer prices around the globe pressured down future prices, despite worries about a smaller Arabica crop in 25/26 in Brazil and tight Robusta supply in Asia.

  • Adding to the bearish trend, the forecast shows a more positive scenario in Brazil, with rains expected in major producing areas.

European Coffee Stocks fall in February

This week, the European Coffee Federation published its stock data for January and February, showing a decline in the last two months. Previously, the trend had been one of recovery, with stocks above 9 M bags in December/24, the highest level since October/23. Although above the level of 2024, February's figure of 7.39 M bags was 36.1% below the average level and one of the lowest in decades.

In terms of stock composition, there has been a decline in all coffee types since December, but with a sharper decline in washed Arabicas, likely reflecting rising prices - as this coffee tends to be more expensive - and concerns over natural Arabica supplies.

Despite the apparent tightness of supply in the world's largest coffee-consuming region, futures prices fell this week, with Arabica May/25 trading below 380 c/lb on Thursday (27), its lowest level since late February. The reason for this lies in demand, with recent data pointing to a possible slowdown in Europe, while news of further price rises could add to the destruction.

EU: ECF Stocks (M bags)

Source: ECF

EU: ECF Stocks by Type (M bags)

Source: ECF

The latest data on European green coffee net imports (imports - re-exports) adds to some of the current concerns about demand. Firstly, looking at the cumulative figures for the 24/25 season (Oct/24-Feb/25), net imports are at 17.3 M bags, similar to 23/24, but still 6.6% below the average for the period (18.5 M bags). What is really concerning, however, is the pace of imports in 2025: while they were in line with seasonality from October to December/24, there has been a sharp decline since January, with imports at their lowest level in 10 years.

In addition, news of a further increase in consumer coffee prices hit the market this week. Issues regarding contract negotiations between roasters and grocery stores have recently arisen in Europe, with the former pushing for price increases and the latter postponing new contracts, even leading to a lack of supply of some brands in some areas of the region. Although most of these disputes came to an end in March, the result was an increase in retail prices. Labels such as Lavazza, Nestle and JDE are also in open discussions with retailers about passing on rising costs in the coming months, which could lead to a further increase in consumer prices. As mentioned in previous analysis (link) EU consumers have already seen an increase in recent months and could see even more expensive coffee in 2025. This also reinforces the view that we could see a decline in demand (and imports) in the coming months.


EU: Cumulative Green Coffee Net Import x Change (M bags)

Source: Eropean Comission, Hedgepoint

EU: Green Coffee Net Import (M bags)

Source: Eropean Comission, Hedgepoint

The scenario is similar in other regions. In Brazil, the Brazilian Association of Coffee Roasters (ABIC) expects prices to continue to rise in the coming months, as consumption habits change in the country. Moreover, data prepared for Reuters by Nielsen also shows a 3.8% decline in roasted coffee sales in North America and Europe in 2024, with prices rising by 4.6%.

On the supply side, the perspective is still for tightness. On the Robusta side, Vietnamese and Indonesian producers are holding their beans, hoping for new highs as Indonesia's supplies become scarce. On the Arabica side, the market still anticipates a smaller Arabica crop in Brazil in 25/26. However, weather forecasts are more positive in the largest producer, with rains expected, especially in Minas Gerais, capping new highs on the future market.

Brazil: Minas Gerais Cumulative Precipitation (mm)

Source: Refinitiv, Hedgepoint

Brazil: Espírito Santo Cumulative Precipitation (mm

Source: Refinitiv, Hedgepoint

In Summary

European stocks fell in January and February, as ECF pointed out this week. Despite the apparent tightness in the world's largest coffee-consuming region, futures prices haven't reacted strongly, with the May/25 Arabica contract even falling below 380 c/lb in recent days.

While supply issues are unlikely to be resolved in the short term - with an expected drop in Brazilian Arabica production in 25/26 and low global stocks - the expected impact on demand from high prices is adding to the bearish case and capping new highs. In the EU, net import data shows a slowdown in 2025, likely due to rising costs and coffee prices. In addition, further coffee price increases are expected in the coming months, not only in the EU but also in other regions of the world, which is likely to affect demand this year.

Weekly Report — Coffee

Written by Laleska Moda

laleska.moda@hedgepointglobal.com

Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com

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