Executive Summary
Arabica coffee futures continue their impressive ascent, with the March 2025 contract testing resistance near 195 cents per pound. The market remains focused on Brazilian weather patterns and their implications for the 2025/26 crop.
Price Action Review
ICE Arabica (KC)
| Contract | Settlement | MTD Change | QTD Change |
|---|---|---|---|
| Mar 2025 | 193.45¢ | +8.2% | +15.6% |
| May 2025 | 191.20¢ | +7.8% | +14.2% |
| Jul 2025 | 188.75¢ | +7.1% | +12.8% |
ICE Robusta (RC)
London robusta has also strengthened, though at a slower pace:
- March 2025: $3,245/tonne (+4.8% MTD)
- Arabica-Robusta arbitrage widening
Brazilian Crop Analysis
2024/25 Harvest (Current)
The just-completed 2024/25 Brazilian harvest delivered mixed results:
- Total production: 66.3 million bags (Conab estimate)
- Arabica: 44.8 million bags
- Robusta: 21.5 million bags
2025/26 Crop Outlook
Early indicators for the upcoming 2025/26 cycle raise concerns:
- Flowering conditions: Below-average rainfall during October-November flowering period
- Cherry development: Reports of smaller cherry size in key Minas Gerais regions
- Tree stress: Multi-year high temperatures affecting tree health
“Our proprietary satellite imagery analysis suggests Minas Gerais arabica production could decline 8-12% in 2025/26” — Trade Grounds Crop Intelligence
Vietnam Robusta Update
Vietnam’s 2024/25 robusta harvest is progressing well:
- Harvest completion: ~85%
- Farmer selling: Steady at current price levels
- Export pace: On track to meet 28 million bag target
Certified Stock Analysis
ICE certified arabica stocks remain at historically low levels:
- Current stocks: 412,890 bags
- 5-year average: 1.2 million bags
- Pending grading: 28,450 bags
The low certified stock situation continues to support the nearby premium and cash market tightness.
Demand Landscape
Import Data
Major importing countries showing robust demand:
- United States: +3.2% YoY through November
- European Union: +1.8% YoY
- Japan: +2.4% YoY
Roaster Activity
Multi-national roasters have accelerated forward coverage, with reports of buying extending into 2026.
Technical Outlook
March 2025 Arabica
The technical picture remains bullish:
- Trend: Strong uptrend intact
- Key resistance: 195.00-197.50¢ (multi-year highs)
- Key support: 182.50¢ (20-day MA)
- MACD: Positive and rising
- Volume: Above average on up days
Seasonal Considerations
Historically, January-February tends to be a strong period for coffee as:
- Brazilian off-season reduces supply pressure
- Northern Hemisphere winter drives consumption
- Q1 roaster restocking activity
Q1 2025 Price Forecast
Based on our fundamental and technical analysis:
| Scenario | Probability | Mar 2025 Target |
|---|---|---|
| Bullish | 40% | 210-220¢ |
| Base Case | 45% | 188-205¢ |
| Bearish | 15% | 170-185¢ |
Risk Factors
Upside Risks
- Further deterioration in Brazil 2025/26 crop estimates
- Colombian production issues (La Niña effects)
- Accelerated roaster buying
Downside Risks
- Dollar strength
- Global economic slowdown affecting consumption
- Better-than-expected Brazil flowering recovery
Trade Grounds Recommendation
We favor a bullish stance on arabica coffee through Q1 2025, with the following considerations:
- Entry zone: 188-192¢ on pullbacks
- Target zone: 205-215¢
- Stop loss: Below 178¢
- Risk management: Position sizing appropriate for elevated volatility
This analysis is for informational purposes only. Trading futures involves substantial risk of loss. Past performance is not indicative of future results.