Coffee futures extended their losses to kick off the trading week despite bullish fundamentals still intact. Is it a case of investors taking profits and baking the mayhem into the cake? Whatever the case, coffee prices have had a rough few sessions as near-term momentum fades. Can coffee return to its highest level in more than a decade?
December coffee futures plunged $0.1215, or 4.72%, to $2.453 per pound at 13:15 GMT on Monday on the US ICE Futures exchange. Coffee prices plummeted 10% last week, though they remain up 31% so far this year. Over the last 12 months, the bean has rallied 68%.
Bullish fundamentals remain intact for coffee: US inventories have tightened and growing conditions in Brazil and Vietnam continue to be the driest in many years. Brazil’s outlook is expected to slump in the 2025-2026 crop season to 54.8 million bags from 58.8 million bags, while Vietnam’s production estimate is anticipated to be 20% lower from the previous season to 1.472 million metric tons.
Market watchers say recent legislation in Europe could weigh on prices in the short term. Last week, the European Commission delayed a deforestation law for one year. According to Barchart:
“The legislation, scheduled to go into effect December 30, is aimed at curbing forest clearance in countries that send products, including coffee, to the EU. The postponement of the law allows certified coffee stockpiles held at European warehouses to be used to satisfy contracts, reducing concerns that the new law would lead to the decertification of the coffee and limit existing coffee supplies.”
Coffee prices could come under further threat by global output. According to the International Coffee Organization (ICO), worldwide coffee production for the 2023-2024 season surged nearly 6% year-over-year to 178 million bags. Additionally, global consumption increased by more than 2% to 177 million bags.
This comes as StoneX forecasts a surprise 2024-2025 supply surplus, the first in four years.
In other agricultural commodities on Monday, November corn futures fell $0.0175, or 0.41%, to $4.23 per bushel. November wheat futures were little changed at $5.89 a bushel. November soybean futures shed $0.0575, or 0.55%, to $10.32 per bushel. December cocoa futures dropped $34.00, or 0.48%, to $7,035 per metric ton.