Nov 10 / Laleska Moda

ICE low stock level continues to support Arabica prices. But can the tides change?

Arabica futures prices continued to be highly volatile in October and early November. Although hopes for a deal between Brazil and the US ang good rains after mid-October weighed on on the bears side in part of the last month, prices are back to trade above the 400 c/lb levels in the past days.
On the fundamentals side, while no deal regarding coffee tariffs has been announced, the drop in Arabica certified stocks in the ICE warehouses continues to be the main driver behind the current bull market. Currently, Arabica stocks are around the 417 k bags, a 1-1/2 year low and close to late 2023 levels, when stocks fell to their lowest in more than 20 years.
On the other hand, the past weeks Brazilian differentials could prompt more deliveries to ICE inventories, albeit a significant volume is needed for stocks to reach a comfortable level.
Weather has also been monitored closely, as Brazil is currently in its development stage for the 26/27 cycle and the first estimates regarding the size of the crop are being made.
In Asia, there has been an increase in fears of impact of heavy rains in Vietnam, due typhoon Kalmaegi.

Coffee future prices continue their volatile trend throughout these past weeks, still reflecting majorly supply concerns. The return of rain in Brazil in mid-October allowed Arabica areas to bloom again and raised the prospect of recovery in the 2026/27 season. Meanwhile, a new meeting between Trump and Lula sparked hopes that US tariffs on Brazilian beans could be revised, which could lead to a correction in prices.

However, over the past few days, the Arabica December contract has returned to trading above 400 c/lb due to short-term concerns. With no concrete deal between Brazil and the US having been announced, and with the 26/27 still in its early development stage, prices are being supported by the continuous drop in certified Arabica stocks in ICE warehouses (check the indicator). Currently, Arabica stocks are around 417 k bags, a 1-1/2 year low and close to late 2023 levels.

Since early August, certified stocks have been falling, with a decrease in the volume of most origins, including Mexico, Honduras, Nicaragua, Peru, Uganda and Brazil – the largest supplier of certified stocks in recent years. From 29 July to 7 November, total stocks plunged by 353.1 k bags (-43.8%), while the volume of Brazilian beans for the same period fell by148.3 k bags (-90.6%) . This reduction is the result of farmers' (especially Brazilian farmers') lack of interest in certified coffee, as they are well capitalized, and the price differentials previously did not compensate for the process. It is also the result of traders and roasters consuming the existing certified stocks, as coffee prices continue to increase. In the case of American companies, tariffs have also increased their costs, prompting them to consume the existing stocks.

On the other hand, there is an expectation of new shipments to the certified stocks in the coming months. Although Brazilian differentials have increased in the past week, in parts of August and September they traded lower, which prompt some traders to certified lots of coffee beans. According to recent news , there is an expectation of at least 150 K bags arriving in the ICE certified stocks in the next months. However, for stocks to return to comfortable levels, a larger volume of coffee is needed, which could still provide support for prices in the short term.

Weather has also been monitored closely in the past weeks and will also play a role in prices movements, as Brazil is currently in its development stage for the 26/27 cycle. Until mid-October, the weather remained dry in most producing regions, bringing some fears over the next season, as many coffee trees had early bloom in September. However, although it is still early to discard negative effect of the previous weather in coffee yields, the rain levels in the second half of October and early November brought hopes for 26/27.

As for Conilon, the weather has been favorable throughout 2025, with a good amount of rainfall in these past weeks, which is helping the development of beans. There is, however, the possibility of a small drop in production in the next season, due to the record crop in 25/26. Usually, when trees produce a large amount, the next cycle is followed by a drop in production, as the reproductive effort tends to reduce plant vigor. Farmers usually prune these trees to increase their potential for the following season (27/28), which reduces the total crop output in the cycle. Meanwhile, there has also been an increase in Conilon areas in recent years, particularly in Espirito Santo and Bahia, which will help to offset some of the expected decline.

Nevertheless, we are not expected to provide our first estimate for the 26/27 cycle until the end of this month. It is also worth bearing in mind that concrete estimates usually emerge after the filling phase, between February and March. These crop forecasts will also have a significant impact on price movements, given that Brazil is the largest coffee producer. Increased production in Brazil will be essential for stock recovery around the world and could help to reduce current bullish price pressures.

Coffee prices continue to be volatile, reflecting uncertainties around supply. While the market awaits news of a potential trade deal between the US and Brazil, prices have been primarily influenced by the current low levels of certified Arabica stock and weather conditions in major producing countries.

With trade between the US and Brazil slowing and farmers sending less coffee for certification in recent months (particularly Brazilian farmers), current stocks are being depleted, which is keeping prices close to 400 c/lb. News of a new shipment to ICE-certified stocks from Brazil could ease the current pressure on stocks. However, higher volumes of coffee would need to be certified in order to return stocks to comfortable levels.

In terms of weather, attention is focused on Brazil as the Arabica regions enter their development period. Rainfall has been favorable since mid-October, but the amount of rain in the coming month will be crucial in determining the size of the next crop and, consequently, the direction of prices.

Outside of Brazil, typhoon Kalmaegi hit Vietnam this past week, leading to an increase in Robusta prices. Although there were fears of an impact on Robusta-producing areas, current reports indicate that the heavy rains mainly affected the pace of the 25/26 harvest. Nevertheless, the market will continue to monitor the situation in Vietnam in the coming days.

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ICE low stock level continues to support Arabica prices. But can the tides change?