Coffee future prices climb amid tightening inventories and weather concerns

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Coffee futures climbed on Tuesday as tightening inventories and weather concerns in major producing countries pushed international buyers to bid up both Arabica and Robusta contracts, a fresh market snapshot from Uganda's agriculture ministry shows.

Data from the London International Financial Futures and Options Exchange (LIFFE), indicates that Robusta contracts finished higher, with the November position closing at $4,200 (close to shillings 14.637 million) per tonne and the January position at $4,186 (about 14.588 million) per tonne.

Arabica markets on the Intercontinental Exchange (ICE) were also firmer. The December contract closed at 374.85 US cents per pound, while the March contract finished at 358.95 US cents per pound.

Traders said two dynamics underpinned the rally. First, ICE inventories have seen a sharp drawdown after the imposition of 50% tariffs on US imports from Brazil, a development market participants flagged as a bullish supply-side shock.

Second, weather anxiety in Vietnam, where dry spells and storms threaten the Robusta crop, tightened physical availability and lent support to Robusta pricing at LIFFE.

Robusta leads in volume sales

The physical market reflected the split between commodity types and quality grades. At domestic auctions, Robusta Screen 15 sold the largest volume, with 15,050 sixty-kilogram bags changing hands.

Robusta Screen 18 and Screen 12 followed with 4,560 bags and 3,600 bags respectively. Quality Arabica lots from Bugisu performed strongly: Bugisu AA, Bugisu A, and Bugisu PB fetched top reported prices of sh28,416, sh28,339 and sh28,339, signaling robust demand for higher-grade beans — prices that sit close to the ICE-derived per-kg Arabica levels.

Farm gate prices stable

On the farm gate, the ministry’s weekly price banding shows wide spreads by type and quality. Kiboko sold at shillings 6,000–6,500 per kg, FAQ (Fair Average Quality) at 12,000–13,000 per kg, Arabica parchment at shillings 14,000–15,000 per kg, while cleaned “Drugar” coffee fetched sh12,500–13,500 per kg.

The gap between top auction prices for graded Arabica and many farm-gate levels underlines both the premium for traceable, well-processed lots and the margin pressure along the value chain.

Sector experts weigh in

Sector experts said the current rally is a reminder that coffee remains a globally traded commodity — at the mercy of weather and policy shocks — but also that Uganda’s domestic policy choices will determine how much of the upside reaches smallholders.

“As always, coffee is a global commodity subject to price fluctuations,” said Dr Michael Mugabira, a coffee sector expert and trader.

He warned that erratic weather in major producing countries such as Brazil and Vietnam will likely keep prices volatile.

More critically for Uganda, he added, is the persistent absence of policy consistency. Mugabira recalled national efforts to craft a Sustainable Coffee Road Map, including an agreement to ring-fence 90 per cent of the Coffee Levy for value-chain support such as planting materials and fertilisers, but said implementation has lagged.

“We move five steps forward and three back,” he said, noting that talk of policy reversals amid only a quarter into the financial year risks undermining long-term targets like the 20-million bags ambition.

Martin Maraka, Chief Executive Officer of the Uganda Coffee Federation, pointed to production shocks overseas as a major price driver. “Remember when prices dropped and I said they would rise again? Brazil suffered multiple frost events,” he said, linking Brazilian weather shocks to the rebound in global prices.

As per the expert analysis, the market will watch three clear risk factors: weather developments in Brazil and Vietnam, inventory movements at ICE and LIFFE, and domestic policy signals from Kampala.

If inventories remain tight and adverse weather persists, Mugabira says the rally may continue; conversely, rapid policy shifts or a recovery in near-term supply could cap gains.