This week, coffee prices remained on the downtrend, alongside other softs commodities. Prices have also mirrored other benchmarks, such as oil: front-month WTI prices fell by roughly 8% since mid-April, and while coffee responded more aggressively (about -15%), it stayed in the middle of the road between sugar and cocoa (roughly -10%, and -30%, respectively, considering the previous highs).
So far, price decreases have been more correlated to spec moves than fundamentals themselves. For instance, in our monthly analysis, we’ve been observing the vulnerability implicit to record-high spec positions (Figure 1). It is important to note, however, that going by the correlation between prices and spec position, there was more room for correction, towards 202-209 c/lb, considering a linear regression for the past 70 periods, since January 2023 and the 5-year series – the level that the first contract is currently testing (Figure 2).
Other points have also been watched by the market, despite not currently altering the global Supply & Demand balance: results from coffee roasters showed a slowdown in the first quarter, especially for results that reflect more in-home consumption. KDP, for instance, posted a -0.3% variation in U.S. coffee volume sales in 1Q/24, and a 1% drop compared to the same period last year.
