The coffee market remains attentive to the progress of negotiations on tariffs. The meeting between Lula and Trump generated expectations regarding a possible tariff exemption for Brazilian coffee, and this prospect triggered lows in arabica prices on the New York exchange, a movement that also extended to robusta in London.
The rollover of contracts continues to dictate the financial pace of coffee trading on the New York exchange, driven by the decline in certified stocks. At the close of October 30, stocks totaled only 446,000 bags, the lowest volume in 19 months. Out of this total, 26,000 bags are Brazilian coffee, equivalent to 6% of the total—a share that was previously more than half in earlier periods.
The December/25 position still concentrates the largest number of open contracts (approximately 60,000), but the March/26 expiration is approaching, with 55,000 contracts. The proximity of the December/25 options expiration on November 12, and the first delivery notice day, on November 19, tends to accelerate the rollover movement, consolidating March/26 as the new benchmark contract.
The market is also reacting to the volatility of the dollar. The Federal Reserve reduced the US prime interest rate by 0.25% to a range between 3.75% and 4.00% per year, confirming expectations. Signals about the Fed’s future movements were not very clear. The interest rate cut in the United States further widened the difference compared to Brazil, where the benchmark rate (Selic) is at 15% per year. This difference reinforces the view of a weakened dollar against the real, as it stimulates carry trade operations – borrowing in the United States and lending to Brazil through the purchase of government bonds.
