Coffee futures dropped to $2.64 per pound this week, with the most active July contract losing 18.1 cents. The market trended steadily lower through the week, reaching the $2.75 range by Thursday. On Friday, a broadly negative day across the commodity complex brought prices within striking distance of the $2.70 support level. Once broken, long-stop selling triggered and prices quickly reached a low of $2.65. Origin selling continues to outpace roaster demand, while roasters appear better covered this year than in prior periods.
The headline driving sentiment is weakening US coffee demand. Net imports plus changes in US inventory levels are down 1.9% on a 12-month rolling basis through March. This reflects broader inflationary pressure on the American consumer, with gasoline prices over $4.40 per gallon compressing discretionary spending. Lower demand means roasters are likely to reduce nearby inventories to preserve cash flow, putting further pressure on the front of the futures curve. A recovery in demand is possible if futures prices fall far enough to allow processors to pass on savings through promotions, creating a more volatile cycle of inventory accumulation and futures buying.
Negative demand headlines are arriving at a difficult moment: Brazil is heading toward a record crop harvest, adding supply pressure to a market already struggling on the demand side.
Sucafina’s near-term view calls for a small bounce toward $2.70 before futures push below $2.60 by the week’s end.