April Market Commentary
The July NY contract remained range-bound throughout April, with the bulk of price action concentrated between 283 and 302 cts/lb and the full trading range spanning 278.30 to 306.25.
With each passing week, the market draws closer to the anticipated bumper Brazil 26/27 harvest. The prevailing trade view holds that the eventual transition to a global surplus will push prices lower, but for now, NY has spent three months going sideways.
Key variables to consider, largely consistent with recent months:
Positive:
NY moving averages for the short-term periods (5, 10, 20, and 50 days) are converging, though prices remain comfortably below the longer-term 100-day and 200-day averages.
Arabica differentials remain broadly elevated, though Brazil fine cup (fc) has softened at the margins.
Stocks at destination across North America, Europe, and Japan remain low.
NY certs may have peaked at current price levels. Brazils could potentially flow to the board against the Dec26 contract, with interim baseline demand running 40k to 50k bags per month.
If NY remains sideways or drifts lower, certs could build toward 300–400k bags.
London’s annual inversion firmed throughout April and, on a percentage basis, now exceeds NY’s.
London COT data shows Managed Money positioning shifted +12.8k lots from end of March to end of April. The buying was largely absorbed by an almost equivalent decline in PMPU gross long positions.
Meteorological organizations are signaling a shift to El Niño conditions as early as May to July 2026, with expectations that a potentially strong El Niño will persist into 2027. The eventual intensity remains to be determined.
The Iran war and Strait of Hormuz blockade(s) continue to stress supply chains, forcing rerouting that affects transit times, bunker fuel costs, fertilizer prices, and more. The Containerized Freight Index rose 10.5% in April alone and now sits 37.6% above the same period last year. The full extent of the impact is hard to gauge. Brazil’s coffee-related fertilizer requirements appear in relatively good shape, but we are less confident about Vietnam heading into 2027. The longer fertilizer flows remain diminished, the more this risks becoming a broader agricultural story in 2027.
ICE robusta inventories slipped to a 16-month low during April, a constructive offset for London prices and supportive of the firming annual inversion noted above.
Negatives:
Brazil fine cup arabica differentials are slipping as new crop harvesting approaches. Fine cup diffs have moved from egregiously painful to merely historically expensive, prompting trade shorts and local roasters to cover just in time.
Trade consensus on Brazil’s 26/27 crop continues to inch higher, with 75–77 million bags now considered the new norm. The occasional whisper of 80 million is starting to circulate. Weather has been supportive and early yields look positive.
NY’s annual inversion (KC2-KC7) is slipping. Many in the trade view the strong nearby May26-Jul26 inversion as an opportunistic play.
USDA’s Honduran 26/27 estimate is 9% higher year on year. Honduras matters here as a key swing supplier to NY certs.
On the macro side, global bond markets are increasingly pricing in higher inflation concerns.
Vietnam export flows surged in April. GSO data shows January to April shipments of roughly 810,000 tonnes (around 13.5 million bags), up 15.8% year on year, with April alone reportedly up 31.7%. Robusta supply pressure is real and the offset to the tight ICE inventory.
US tariff overhang and the Brazil-US relationship. CBP began processing refunds of the $166bn in IEEPA tariffs struck down in February, with the CAPE portal opening April 21. Lula’s planned visit to the White House is aimed at resetting the trade dialogue. The combination is constructive for the Brazilian real and, at the margin, for US import demand, but the policy path is far from settled.
Neutral - Undefined:
July 2026 NY may see the tightest pipeline arabica levels before the market transitions to the 26/27 crop. The open question is whether Jul/Sep follows the May/Jul path, or whether NY cert holders choose to exit while the party is still going.
NY Non-commercial and Index positions were little changed on the month, with a slight build skewed more toward the Index side.
Range Context
After three months trading in a 278.30 to 306.25 range, an eventual breakout would project either to 250 or to 330.
