The arabica gains in New York have been sustained by the improvement in the financial environment, the weak dollar and a more favorable technical scenario. There is, however, little fundamental support for this rise. It is true that the limited physical availability of coffee in the global market serves as a supporting factor, but the tight supply has long been priced.
Another important signal comes from funds, which have been reducing their net long position with coffee on the New York Stock Exchange. The latest report from the CFTC (Commodity Futures Trading Commission) showed that, at the end of trading on April 22, funds held a net long position of 41,000 arabica futures contracts, a slight increase from the almost 40,000 the previous week, but well below the 76,000 contracts registered at the end of January. This reduction reflects uncertainties in the financial environment, caused by the “tariff war,” and the expectation of some relief in supply with the arrival of the new Brazilian crop. Even so, at least until the end of winter in Brazil or even until the beginning of the blossoming of the 2025 Brazilian crop, it is likely that funds will maintain a net long position, supported by low supply and climate risks — such as possible frosts.
Robusta, traded in London, does not follow the gains of arabica in New York. The progress, albeit timid, of the conillon/robusta harvest in Brazil and the start of the main crop in Indonesia help to ease pressure on global supply. In addition, the weather scenario in Vietnam — the main grower of robusta — is more positive at the moment, with good rains forecast in the coming weeks, which will favor blossoming and the development of the next crop, reinforcing the prospect of a 2025/26 crop larger than the current season. As a result, the NY/London arbitrage has widened again, hovering around 157 cents. This means that arabica is currently 157 cents more expensive than robusta.
