
Nov 29
/
Laleska Moda
Arabica prices set new record as risks increases
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- Coffee futures prices soared this week. Arabica contracts surpassed the 300 c/lb levels early this week, with the March contract closing at 326.15 c/lb on Wednesday, setting a new record for future prices. Robusta futures were also up.
- Brazilian domestic prices were also at new record levels this week, with the CEPEA/ESALQ Arabica Indicator hitting 2,090.65 BRL/bag on Thursday, while Robusta reached 1,766.75 BRL/bag on the same day, also a new record.
- The market is mainly being driven by fears of a smaller crop in Brazil in 25/26 and the lack of producer interest in new sales, as speculators continue in long positions. Vietnamese 24/25 harvest is also delayed, with a significant volume of beans still to hit the market.
- The recent rally is heightening the risk of panic buying, with threats of producers delaying or defaulting on deliveries and rising hedging costs due to higher margin calls, further adding to market risk.
Arabica prices set new record as risks increases
Coffee futures continue its upward trend this week, following the increase in risk on the supply side. The high was significant for the Arabica futures, which reached their highest levels in nearly 50 years, with the March contract closing at 326.15 c/lb on Wednesday, 27. The recent rally majorly reflected the current producer retraction in Brazil and concerns over the 25/26 crop in the country, as the dry and hot weather up to September may have impacted the arabica crop, as mentioned in past analysis (link). With around 70% of the Brazilian 24/25 already sold and perspectives of further supply constraints in the next season, producers are in no rush to sell their remaining beans.
NY Arabica – Price behavior (c/lb)

Source: Refinitiv, Hedgepoint
LN Robusta – Price behavior (USD/mt

Source: Refinitiv, Hedgepoint
Prices in Brazil are also reaching new records this week, but there is little movement in the market. The CEPEA/ESALQ Arabica Indicator reached 2,090.65 BRL/bag on Thursday 28, a new record for the time series. Robusta prices also hit new highs on the same day, at 1,766.75 BRL/bag. However, the spread between the two varieties increased in November, after reaching negative levels in September, indicating that arabica prices had a more significant increase during the month. The spread is likely to surpass the average levels in the coming days, as the arabica regions in Brazil were the ones most affected by adverse weather in 2024 and might see a decrease in 25/26. This may also lead producers to hold their beans in the coming months, in the expectation of further price rise, triggering fears of tighter trade flows for the variety in the coming month.
Brazil: Domestic Prices – Arabica and Robusta (BRL/bag)*

Source: Safras & Mercado (*updated until Nov 27)
Brazil: Spread for Arabica Good Cup x Robusta 13 up (BRL/bag)

Source: Safras & Mercado
Spread for the arabica March – May contracts also highlight this increase in worries over supply constricts in early 2025. Interestingly, the recent highs have also led ICE US to raise the initial margin for the KC arabica contract in recent days, with a possibility of further increase in the coming months, as the market is currently highly stressed. While there were no impact from this movement until now, a rise in the initial margin could lead to a selling in funds position and a halt in the current rally of arabica prices. Indeed, this change would be welcomed in the market, as current prices are heightening the likelihood of panic buying. Funds are still holding long positions, and there are threats of producers delaying or defaulting on deliveries. Additionally, the increase in hedging costs due to higher margin calls is adding to market risk.
For robusta, although the spread between January and March contracts is below the levels seen in September when the market was stressed over robusta availability, it remains positive. Even with the possible recovery in the Brazilian 25/26 crop regarding robusta production, the Vietnamese 24/25 harvest was delayed, with a significant volume of beans still to hit the market.
For robusta, although the spread between January and March contracts is below the levels seen in September when the market was stressed over robusta availability, it remains positive. Even with the possible recovery in the Brazilian 25/26 crop regarding robusta production, the Vietnamese 24/25 harvest was delayed, with a significant volume of beans still to hit the market.
NY Arabica Mar-May Spread – Seasonal Chart (c/lb)

Source: Refinitiv
LN Robusta Jan-Mar Spread – Seasonal Chart (USD/mt)

Source: Refinitiv
In Summary
The coffee market is currently on a rally as supply concerns persist - now on the arabica side - with many participants on edge as risks mount. Arabica coffee futures are currently trading at their highest levels in decades, driven by the prospect of a drop in Brazilian production in the 25/26 season and currently tight trade flows in the 24/25 Brazilian season, as producers have sold most of their beans and are in no hurry to sell further, even with domestic prices at record highs.
However, as speculative funds maintain their long positions and prices continue their upward trend, the market is also seeing increasing risks, especially as hedging costs rise. The prospect of a tight market in the Brazilian off-season could also lead to panic buying as producers may delay or fail to deliver. The question remains, for how long prices can hold up before we see negative effects on trading activity and even in consumption?
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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