Daily Coffee Report 8/6/26
Daily coffee report
StoneX Coffee Team
- Coffee
StoneX: Volatility in Coffee Market Expected to Continue Amid Increasing Uncertainties
By: Alexis Rubinstein, Managing Editor - Coffee Network
StoneX: Volatility in Coffee Market Expected to Continue Amid Increasing Uncertainties
CoffeeNetwork (New York) – Today, Albert Scalla, Senior Vice President of StoneX, gave his presentation at the virtual National Coffee Association (NCA) convention highlighting the factors that have been impacting the global coffee market in these unprecedented times.
Arabica prices on the international first collapsed during the initial COVID lockdown, but afterwards, were pushed higher by the ‘perfect storm’ of factors: the reopening of economies, the devaluation of the US dollar, the emergence of the commodities super cycle, the onset of inflation, weather in Brazil (drought and frost) and the squeeze in Colombia.
Now, following this slew of bearish factors, the Russia invasion of Ukraine has come into play both in the global economic markets and the coffee market, specifically. Because of these times, and the impact of these factors, the normal “super cycle” for commodities that takes 14-18 years is now taking place within 9 years. A super cycle is brought about by a drop in the perceived value of the US dollar, low interest rates, inflationary pressure and a global economic boom.
Coffee players have been keeping a close eye on inflation, as inflation goes up, the central bank will have to raise interest rates. When we see a hike in interest rates, the US dollar will strengthen. And when the US dollar is firm, this is bearish for commodities (and coffee). Currently, the market is expecting the federal reserve to raise interest rates next week, although the situation in Eastern Europe has left many unknowns.
Another major factor that will impact the coffee market now is the availability of fertilizers for coffee producers in Brazil, and other major coffee producing nations. Brazil imports 30% of its fertilizers from Russia and, since the invasion, prices of Urea, UAN and NH3 have all spiked and Russian companies can’t pay and can’t collect with Russian banks shut down out of the international Swift system. China has also announced that they will shut down their fertilizer exports to keep the supplies internal for their own consumption. As a result, Brazilian farmers have been looking for new suppliers and carefully watching inventory.
In terms of the impact on consumption, between Russia and Ukraine, coffee consumption is about 5.4 million bags. Neighboring countries make up another 4.9 million bags, and countries accepting refugees always feel an economic strain, meaning around 10 million bags of consumption are in jeopardy. “War is never good for consumption,” Scalla said.
Because of this, we have seen coffee prices release 20% of their value in the last few weeks, attributed to concerns around a lack of demand in that part of the world but also a mass exiting of funds from coffee.
Certified stocks have also fallen sharply as the logistic challenges and rising shipping costs made certified coffee one of the cheaper options. Differentials at origin were higher, prompting certified stocks to plummet below the 1 million bag level. With certified stocks, they are already at destination, don’t have to deal with freight issues, and have accumulated discounts because of aging. This discounts will start to accelerate as of July/August, so certified stocks are expected to continue to decline.
Looking forward, the coffee market will need to keep a close eye on weather, including Brazil’s upcoming winter and the status with La Nina and the possible transition to El Nino.
Scalla notes that because of weather, combined with the fertilizer situation, branch growth during the flowering period in October for Brazil’s Arabica crop will be a major factor.
Alexis Rubinstein
- Coffee
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Daily Coffee Report 8/5/26
Daily coffee report
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- Coffee
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