Arabica Coffee Prices Dip Amidst Consumer Concerns

In recent trading on the ICE exchange, Arabica coffee futures have experienced a significant downturn, reaching their lowest point in a month due to rising worries about potential drops in consumer demand. On Thursday, the price for Arabica fell by 2.9%, settling at $3.8070 per pound, a stark contrast to its earlier position, which saw prices dip to $3.7560—the lowest since late February.

Market Reactions and Price Pressures

Broker and market consultant Michael J. Nugent highlighted that traders are closely monitoring Brazil’s rainfall patterns, as these are crucial for the development of the upcoming coffee crop and the replenishment of dwindling global inventories. However, he expressed growing apprehension that the current record-high prices could clash with declining consumer confidence.

• Major coffee roasters like Nestlé and JDE Peet’s are in discussions with retailers about passing on the nearly 100% increase in Arabica prices over the past year.
• Reg Watson, an equity research director at ING, predicts that consumers could experience price hikes of 15%-25% at retail locations, with some markets seeing these increases all at once.

Weather Impacts on Coffee Production

Forecasts indicate that Brazil will continue to experience showers and thunderstorms over the next ten days in its coffee-growing regions; however, the expected rainfall remains relatively light. Meanwhile, the Robusta coffee market also saw a decrease, with prices falling 1.6% to $5,357 per metric ton, hitting a monthly low of $5,280. This decline can be attributed to tighter supplies in major producing countries like Vietnam and Indonesia, where farmers are holding onto their beans in anticipation of better prices.

Sugar Market Downturn

In the realm of sugar, raw sugar prices dropped 1.6%, settling at 19.06 cents per pound. Recent reports from industry group Unica revealed a substantial 18% decline in sugar cane crushing in Brazil’s center-south region during early March, compared to the previous year. Sugar production also fell by 19%, totaling just 52,000 tons.

• Notably, a fire at Sao Martinho’s Iracema plant has resulted in a shutdown of one of its boilers. This incident could reduce daily ethanol and sugar production at the site by up to 30% for the 2025-2026 harvest.
• The price for white sugar also saw a minor decline, falling 0.8% to $536.20 per ton.

Cocoa Market Fluctuations

Turning to cocoa, London cocoa prices dipped 0.9% to $6,201 per ton, following a 1.1% increase the previous day. While cocoa prices are receiving some support from anticipated declines in mid-crop production in Ivory Coast, concerns over weakening demand due to high prices are capping any significant gains. The market is currently in a holding pattern, awaiting fresh news to drive trading decisions.

• In New York, cocoa prices slipped 0.2% to settle at $8,033 per ton.

As the market continues to evolve, stakeholders are encouraged to keep a close eye on these developments, which could significantly influence pricing trends across coffee, sugar, and cocoa sectors.