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Rodrigo Faria
1 hour ago
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Analysts at Safras & Mercado reported yesterday that Brazilian coffee growers sold about 14% of their total estimated production of 65 million bags from July 2025 to June 2026, combined with Conilon Robusta and Natural Arabica coffee, for next year. This crop estimate is marginally higher than the industry median forecast, which is set pre-harvest at 62.50 million bags, and within the context of Brazil’s estimated domestic consumption of 22 million bags and estimated export demand of 45 million bags, it will be necessary to continue to feed demand from the domestic and foreign coffee consumer market.
Sales activity for this new crop is seen slightly lower than the 25% sold at the same time, when compared to the five-year average. It is fair to say that producers are well-financed and remain hesitant to fully engage in futures activity, releasing coffee at a moderate pace ahead of the upcoming new crop.
The prevailing volatility on the New York Futures Exchange, coupled with the inverted market structure, will likely add some caution and risk aversion to buyers, who will be hesitant to enter the physical market too early, given the upcoming new Brazilian crop and the potential continued market volatility as we head into the traditionally cooler winter months.
The shift in the futures market landscape, in turn, has provided some opportunities for commercial buyers to participate at lower prices, seeking protection ahead of the traditionally cooler summer months.
The US-based National Coffee Association (NCA) has released its latest Coffee Data Trends Report, in which they report that information extrapolated from the relatively small sample of respondents indicates that, on average, 66% of Americans surveyed indicated that they had a cup of coffee in the previous day; This figure is an improvement from the 65% reported in its 2024 report. The report further illustrates a decline in out-of-home consumer behavior, which is indicative of the tighter inflationary economic backdrop; coffee consumption in out-of-home locations has declined by 2% over the past 5 years, reporting that 16% of coffee drinkers consumed at least one cup of coffee in an out-of-home location in the past day. While in-home consumption continues to grow and remains the preferred location for coffee consumption in the US, the report states that 71% of all brewed coffee is consumed at home, an increase of 8% over the past 5 years. The uncertainty that has developed during the last round of trade discussions regarding intermittent tariffs and, at present, the overall 10% increase that is expected to be implemented within 90 days, is being discussed intensively with the US, with domestic lobbies pushing for zero tariffs to be implemented on coffee imports to supply this important sector of the US economy, which is also the largest coffee consumer in the world.
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