Weekly Coffee News: South America

Coffee Market News

The geopolitical situation remains largely unchanged, but there are some minor improvements: The ceasefire in the Gaza Strip continues to hold, bringing a degree of calm to the Middle East conflict. More than 20 Israeli hostages have been released so far, while nearly 600 Palestinian detainees have been freed. This de-escalation also positively impacted the Suez Canal, where the first ships resumed passage. If the route remains secure, transit times for raw materials – including coffee – to Europe could be reduced by up to ten days. This would lower freight costs and improve the availability of coffee from Ethiopia, Kenya, Tanzania, Uganda, Rwanda, India, Vietnam, Indonesia, and Papua New Guinea. An estimated seven to nine million bags are "trapped" between loading and arrival ports. Faster shipments could partially ease the current supply bottleneck.

Arabica prices in New York and Canephora (Robusta) in London hit new historic highs last week. The Arabica price increased for 18 consecutive trading sessions, reaching a 52-year record of 413.95 c/lb on Friday. The market is now entering previously unexplored price territory, comparable to the thin air of mountaineering at high altitudes. With few sellers available, even a small number of buyers can push the market further upwards.

Several factors are fueling this extreme price movement: large industrial roasters, who have been hesitant but are now forced to secure contracts at these high levels; the rolling of hedge positions from March 25 (KCH25) to May 25 (KCK25); and the buyback of short positions due to liquidity shortages (massive margin calls). Additionally, speculative players, including hedge funds and AI-driven trading algorithms, continue contributing to high volatility.

At the close of the week, the New York market was up seven percent at 404.35 c/lb, while London ended nearly unchanged at 5,561 USD/MT.

The current market situation is reminiscent of Reinhold Messner and Peter Habeler's legendary Everest ascent on May 8, 1978, without supplemental oxygen – a feat many experts deemed impossible. Coffee prices are now in a similar "death zone". The global economy cannot sustain these extreme price levels indefinitely – a demand adjustment appears inevitable.

The following table contains key information from the past trading week:

The abrupt shutdown of USAID has sent shockwaves through the developing world, particularly in rural communities reliant on its programs for trade, poverty alleviation, food security, and healthcare. The agency's dismantling has severely impacted the coffee sector, which invested millions over three decades to support producers. The Trump administration's freeze on foreign aid led to an immediate halt of all active projects, leaving organizations and thousands of beneficiaries in uncertainty. USAID's workforce has been slashed from over 13,000 to fewer than 300, exacerbating instability in the global development landscape. The closure leaves critical gaps in infrastructure and support, with long-term ramifications for affected industries and communities.

Origin News

Brazil

Brazil has started to plant more coffee; who wonders with these high prices? And they will not be the only ones—even our office in Hamburg has ripped off the evergreens to get some coffee plants in the pots… The curious part, however, is that the Arabica-traditional Minas Gerais producer has started to plant Conilon, and the more Conilon-specialized region of Espirito Santo has started to plant Arabica trees. It looks like the grass is always greener on the other side.?

Brazil is currently in its summer season, which is marked by occasional rain this year. In eastern coffee-producing regions like Sul de Minas, Cerrado Mineiro, Espírito Santo, and Rio de Janeiro, conditions are warm yet cloudy, with some thunderstorms. In western Robusta-producing regions, light rains are forecasted almost daily. Overall, conditions remain favorable for the upcoming crop.

The local coffee market remains tight, driving higher prices. In recent weeks, producers have been holding back their coffee, limiting supply and further pressuring prices. Furthermore, according to Brazil’s National Supply Company (CONAB), 2024/2025 production is expected to be 1.6% lower than the 2023/2024 crop year, totaling 54.2 million bags. The reduction is based on weather-related factors such as frosts, droughts, and high temperatures affecting the crop.

No updates are coming from the Port of Santos.

Colombia

According to the National Coffee Growers Federation (FNC), Colombia’s coffee production increased by 41.4% in January to 1,356,000 bags, while cumulative production for the first four months of the current harvest year reached 6,254,000 bags, marking a 35.42% increase over the previous year. At the same time, more than 1,1 million bags were exported in January, with total exports for the period reaching 4,669,000 bags—an increase of 16.52% compared to the same timeframe last year. This growth reflects strong market dynamics driven by favorable weather conditions and optimized production.

Climatic conditions have been mostly dry across coffee-producing regions, but now rain has arrived. Rain is forecasted throughout the entire week across regions from Antioquia, Caldas, Valle del Cauca, Quindio, Cauca, and Huila.

The main crop is largely completed in some regions, such as Antioquia, Santander, Caldas, Risaralda,Quindio, Valle del Cauca, and Huila. The fly crop is in sight and expected to begin around April-May.?

Local prices are currently stable, and coffee is flowing internally.?

No news is coming from the Buenaventura (Pacific) and Cartagena (Caribbean) ports.??

Peru

Currently, Peru is relatively quiet in terms of coffee. Flowering in some regions was reported in December, giving a glimpse into the 2025 harvest, set to begin in April.

Weather conditions continue to be rainy across the country, from Amazonas and Cajamarca to Junin and Puno.

Peruvian ports are experiencing congestion due to the high demand for cargo vessels, which is causing delays in container arrivals and departures.