Coffee futures basis the most active May contract fell 4.05 cents week-on-week, closing at 292.85 US cents/lb, after briefly reaching a high of 297.45 cents before retreating.
Brazil crop outlook weighs on sentiment
Bearish sentiment prevailed following the National Coffee Association conference in Tampa, where the broad consensus pointed to Brazil producing a crop close to or at record levels. With a surplus of coffee expected, many market participants expressed a willingness to sell into the market or wait for the new crop harvest before buying.
That said, current differentials for Brazilian Arabica coffees remain at elevated levels, which is a factor worth monitoring.
Trade lane disruptions provide some support
The ongoing conflict involving the US, Israel and Iran is presenting challenges to trade lanes through the Strait of Hormuz and the Red Sea, reducing nearby coffee supply availability. This is providing some counterweight to the bearish crop outlook.
Despite this week’s pullback, market conditions are still seen as supportive of a move back above $3.00/lb in the near term.
For real-time coffee prices and coffee price forecasts, visit: https://app.vespertool.com/