Between Market Volatility and Stock Decline, A Strategic Insight Ahead of Q3

This report offers a comprehensive analytical overview of the green coffee market’s performance during June 2025. It is based on data available through the end of the month, with the aim of supporting preparations for entering the third quarter of the year.

Futures Contracts, Technical Rise Driven by Repositioning

Coffee futures, specifically the N5 contract, recorded a notable upward movement during the week ending June 7, closing at 358.05 cents per pound compared to 342.45 cents on May 30. This rise was not the result of changes in market fundamentals, but rather a response to technical analysis signals, most notably the oversold condition, which prompted investors to reposition and make short-term purchases.

Certified Stocks, A Decline That Draws Attention

Certified coffee stocks on the exchange fell to 820,669 bags, down from 888,390 bags the previous week. This significant decline reflects mounting pressure on the supply side. While this drop does not yet indicate a crisis, it is a critical indicator that should be closely monitored in light of the weakened global supply.

Exchange Rate, Rising Real Supports Global Prices

The appreciation of the Brazilian real against the U.S. dollar, reaching 5.56 BRL by the end of the first week of June, contributed to a rise in global coffee prices. A stronger currency reduces the attractiveness of exports, which in turn constrains external supply and pushes prices upward, particularly when combined with a drop in certified stocks.

Brazilian Harvest, Gradual Progress Despite Rain

According to data released by Safras & Mercado, the Brazilian coffee harvest had reached approximately 28% completion as of June 4, with 40% of the Conilon crop and 21% of the Arabica crop harvested. Although some rainfall was recorded in growing regions, harvesting activities had not been significantly affected thus far. However, weather forecasts at the time indicated an approaching cold front moving toward the state of Minas Gerais beginning June 10, which could potentially slow the pace of harvesting and drying in the coming period.

Local and Export Market Activity, Divergence in Liquidity

The Brazilian domestic market saw limited activity, although price fluctuations helped stimulate short-term deals in regions such as Matas de Minas, South Minas, and Luís Eduardo Magalhães in Bahia. In contrast, the export market (FOB) remained slow, with only limited spot deals reported for both current and upcoming crops, reflecting a general sense of caution among international buyers.

Reference Prices in the Brazilian Market, June 2025

These prices are used as reference benchmarks in evaluating both domestic and international transactions, particularly in negotiations involving large volumes or long-term contracts.

Analytical Outlook Ahead of Q3

With the official expiration of the N5 contract on June 20, 2025, the market began repricing based on subsequent contracts, particularly those for July and beyond. While the data presented in this report reflects the first half of June, the continued influence of technical factors and climatic conditions makes it highly relevant when assessing market trends at the beginning of July.

Furthermore, changing weather conditions in producing regions, particularly Minas Gerais, may pose additional challenges to the pace of the Brazilian coffee harvest. This necessitates close monitoring of field conditions and their impact on supply chains.

This analysis will be followed by a mid-Q3 update in upcoming reports, covering market movement after July contracts come into effect.

Conclusion

The June 2025 analysis provides a clear view of market conditions ahead of the third quarter, where technical indicators intersect with evolving climatic developments that are still taking shape. As such, anticipating what’s next requires flexibility in decision-making and rapid responsiveness to daily shifts, especially amid ongoing uncertainty in agricultural commodity markets.