Market Reports

Following Monday’s historic rally, the coffee futures markets retraced sharply yesterday as profit-taking, speculative liquidation and higher exchange margin requirements triggered a broad sell off. The New York arabica September 2026 contract fell 9.24%% to settle at 317.60 usc/Lb, while the London robusta September 2026 contract fell 4.25% to settle at US$ 3,872.00 per Mt. The upward momentum on Monday was amplified by speculative buying and technical momentum after US markets reopened following the Independence Day holiday on Friday last week, with many investors repricing weather-related risk. Although concerns surrounding the development of a potentially strong El Niño remain firmly in place, the correction in the market yesterday might indicate an overbought situation rather than a shift in the underlying market outlook. Weather forecasts continue to pose significant challenges to global coffee production, suggesting volatility is likely to remain elevated in the near term and with the markets illiquid and speculative sentiment the leading directional influence.

In other coffee international trade news, a proposed US trade tariff increase could have significant implications for the global instant coffee market, with Brazil’s Soluble Coffee Industry Association ABICS, warning that a proposed increase from the current 10% tariff to a new 25% tariff on Brazilian instant coffee would increase costs throughout the supply chain and ultimately impact pricing for US consumers. It is worth noting that tariffs for Brazilian Instant Coffee were pegged at 50% through the initial implementation of the Trump administration last year, although reduced to the now current 10% level following the Supreme Court Ruling towards the end of 2025.

According to the National Coffee Association USA., and ABICs, Brazil currently supplies more than one-fifth of US instant coffee imports, while domestic US production remains very limited and equates to less than 6% of overall consumption. Industry bodies from both Brazil and the United States have argued that the tariff would place additional pressure on businesses, raise retail prices and disproportionately affect value conscious consumers, particularly as instant coffee continues to gain popularity in the US market. Instant coffee is consumed by 11% of daily coffee drinkers according to the National Coffee Association NCA, a figure that has grown from 6% over the last 5 years.

Meanwhile, importers of green coffee to the US have initiated the process of applying for tariff credits for green coffee purchased during the 2025 increased green coffee implementation tariff period. The US Customs and Border Protection CBP has since launched the Consolidated Administration and Processing of Entries CAPE system.  This portal provides access to importers, supply chain actors and consumer roasters in the States, to lodge refund claims for tariff payment outlay as per the earlier imposed and now rescinded International Emergency Economic Powers Act IEEPA during 2025.

From a fundamental perspective, one might comment that the markets are anticipating a record 50 million bag mostly natural arabica crop to come from Brazil.  With the harvest that is underway albeit delayed in some parts by rain, there is nevertheless a sizeable coffee crop to come.  This is anticipated to bring some relief to consumer roasters within the next couple of months. This, while the midyear crop from Colombia is delayed leading to a very tight internal market along with the new crop harvest to come from Peru with equal delays and internal market price and steep differential development reflected.  this while, overall, consumer stocks remain tight and with only limited and logistically delayed coffee flow as reflected in the steeply inverted futures market.

The Certified washed arabica coffee stocks held against the New York exchange were seen to decrease by 4,290 bags yesterday, to register these stocks at 362,466 bags, with 72.80% of these certified stocks held in Europe, at a total of 263,883 and the remaining 27.20% being held in the USA at a total 98,583 bags. Of this, a total 10,288 or 2.83% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 29.78% of these certified coffees, from Honduras at 107,970 bags and 16.34% from Peru at a total 59,232 bags. The pending grading remained unchanged on the day, registering 275 bags pending grading, with 100% from Honduras.

The September 2026 to September 2026 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 141.97 Usc/Lb. This equates to 44.70% price discount for London robusta coffee.

It was a mixed day on the commodity markets yesterday, with attention turning to the US Federal Reserve monetary policy meeting minutes due to be released later today, which will likely provide cues on the next interest rate decision. The Cocoa, Corn, Soybean, Wheat, Palladium and Platinum markets ended the day on a firmer note, while the Coffee, Sugar, Gold and Silver markets ended the day on a softer note. The day starts with the US Dollar trading at 1.335 Sterling, at 1.141 to the Euro and with the US Dollar buying 5.160 Brazil Real.

The London and New York markets opened trading to the south of par yesterday, following the very firm close on Monday. The markets quickly encountered a large degree of speculative selling pressure, with both the New York and London markets falling sharply lower.  The lows attracted further selling, with the markets encountering an increased degree of pressure during the early afternoon session, with the arrival of the America’s reflecting increased volume and a continuation of speculative selling on the New York floor triggered stops along the way. The London market dropped lower emulating the moves in New York and speculative long liquidation accentuated the negative moves in both markets. The selling activity started to wane toward the end of the days’ trade, the New York market recovered some of the earlier losses late in the day, whilst the London market settled near to the lows for the day.

The London market ended the day on negative note, with 86.87% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 94.07% of the earlier losses of the day intact. This very soft close for the markets and with both the New York and the London markets retaining most of the earlier losses to settle near to the lows of the day, with the markets giving back most of the gains from the very firm day on Monday, to set the tone for a hesitant start to early trade today, against the prices set yesterday, as follows: