Coffee futures basis the most active December contract fell 17.7 US cents per pound last week, closing at 373.60. The market had been expected to calm down and move toward 375 by Friday, which aligned with actual price movements.
ICE certified inventory decertification continues
Decertification of ICE certified inventories has continued in recent weeks. The market now widely understands that at least the Mexican portion of certified stocks—131,000 bags out of 509,000 total—will likely be sold by year-end.
ICE certified stocks previously reached a low of 224,000 bags in December 2023, when the market was trading at 179 cents per pound.
Brazilian rainfall supports 26/27 crop development
Recent rainfall across Brazil’s main coffee-growing regions exceeded 30mm on a production-weighted basis beginning last Wednesday. Forecasts indicate an additional 35mm+ of rainfall over the next seven days.
These rains will result in the fixation of the main flowering for the 26/27 Brazilian Arabica crop. General consensus suggests the next crop will likely not be a record for Arabica, but will come close and beat the last two crop estimates by at least 5 million bags.
EUDR postponement under consideration
The possible delay or postponement of European Union Deforestation Regulation (EUDR) legislation could remove a significant impediment to certifying new inventories in Europe.
Price outlook for the week ahead
According to Sucafina, prices are expected to test 370 cents per pound this week. If that level breaks, prices could finish around 360 cents per pound.