Coffee futures for the most active December contract fell about 3% over the week to Monday, broadly the move Sucafina had expected. The market found some support near its lows from end-of-month flows and portfolio rebalancing.
The bigger signal is coming from Brazil. Indications for October exports have kept improving, pointing to a possible record month for both Arabica and Robusta. Consuming countries badly need natural Arabicas to rebuild their pipelines ahead of EUDR, but the size of the shipments suggests more coffee is arriving than nearby demand needs.
That raises the possibility that ICE certified inventories start to rebuild. These stocks are the physical coffee behind the futures contract, so a rebuild would be a critical signal to the market that coffee is turning from a deficit to a surplus. A week earlier, Sucafina had pointed to how little news there was of new certified stock arriving in Europe when it called for further downside.
For this week, Sucafina expects the market to keep trading lower within a range.
Read the full coffee market analysis here.
