ICE Ends C-Price; Brazil Drought, Roasters Rally!!

Last week brought a string of concrete developments that have immediate implications for coffee prices and positioning. The Intercontinental Exchange (ICE) announced a planned end to the familiar C-Price denomination, inventories continue their downward trend, weather threats in Brazil and Vietnam are shaping supply expectations, and aggressive roaster buying around index rolls has supported futures. At the same time, Vietnam’s export growth and U.S. tariffs on Brazilian coffee are exerting contrasting influences. Below we unpack the facts investors and commercial participants need to watch closely.

Benchmark change: ICE moves away from the C-Price

ICE has confirmed that its long-standing C-Price quotation—expressed in U.S. cents per pound—will be phased out, with contracts to be re-denominated in dollars per metric ton starting after the March 2028 contract. This is a structural change in how Arabica futures will be quoted and settled.

Why this matters now

On a practical level, traders, roasters, exporters, and risk managers will need to retool spreadsheets, hedging systems, and cross-commodity comparisons. While the re-denomination is not a direct near-term supply shock, transitions of this scale can create friction, timing mismatches, and temporary liquidity shifts that influence execution and price discovery—especially during the roll periods that attract concentrated flows.

Supply-side pressure: inventories and weather

ICE-certified inventories continue to tighten. Arabica stocks recently fell to roughly 418,200 bags, near multi-year lows, while Robusta registered inventories at about 5,926 lots—levels that reduce buffer capacity for unexpected demand or crop issues. Lower exchange-certified stocks increase sensitivity to production disruptions and logistics delays.

Brazil: below-average rain in key zones

Brazil’s key Arabica regions, including Minas Gerais, have experienced a series of drier-than-normal weeks. Recent weekly totals—around 33.4 mm in one reporting period, roughly 75% of the historical average—are notable during flowering and bean-fill windows. Continued dryness through the growing cycle can lower yields and bean quality, tightening available Arabica supplies later in the season.

Vietnam: storm risk and rising exports

Vietnam’s Central Highlands faced typhoon-related flash-flood warnings, a short-term logistical and field-risk factor for Robusta. At the same time, Vietnam’s exports through October rose more than 13% year-over-year and production forecasts call for a mid-single-digit percentage increase for the coming year—adding resilience to the Robusta side of the complex.

Demand dynamics: roaster buying, index rolls, and retail strain

Futures have been supported by heavy roaster buying ahead of index-roll periods. That demand, combined with technical roll mechanics, lifted the March Arabica contract toward the high 300s (approximately 387.7 ¢/lb in recent trade), preventing routine short-term pullbacks and encouraging momentum-driven flows.

Downstream squeeze: tariffs and retail pain

U.S. import tariffs—most notably a 50% tariff on Brazilian coffee—remain a structural cost for green-bean supplies into the American market, elevating wholesale and retail prices. Independents and smaller chains have reported sharp input cost increases (green coffee prices up significantly year-over-year) and a wave of price hikes or store closures. That downstream stress is meaningful: sustained retail contraction would eventually feed back into reduced roaster demand and could temper futures upside over a longer horizon.

How these forces interact

The near-term price picture is being driven by a classic supply squeeze: shrinking certified stocks plus real weather risk in Brazil. Roaster accumulation ahead of rolling indices amplifies that squeeze and creates short-term price support. Offsetting factors include Vietnam’s rising Robusta availability and the looming structural change to ICE contract denomination, which could alter liquidity patterns over time. Retail demand elasticity —how consumers respond to higher cup prices—remains a wildcard that could blunt price gains if it triggers meaningful consumption declines.

Signals for traders and commercial players

• Watch Brazil weather daily during flowering and bean-fill windows; continued dryness materially raises downside production risk.
• Monitor ICE-certified stock reports closely—further draws will increase upside vulnerability.
• Track Vietnam export and production updates for signs of larger-than-expected Robusta relief.
• Prepare models for the C-Price transition: hedge ratios, contract conversions, and index-roll timing will shift execution tactics before and after the denomination change.
• Assess downstream demand indicators—retail closures, order patterns from roasters—as a potential dampener on futures if consumer pushback intensifies.

Conclusion

The past week delivered several concrete, price-relevant developments: ICE’s announced move to end the C-Price by 2028, tightening certified inventories for both Arabica and Robusta, below-average rainfall in Brazil’s key coffee regions, typhoon-related threats in Vietnam, and strong roaster buying around index-rolls. These dynamics collectively favor near- to medium-term upward pressure on futures, particularly for Arabica, though Vietnam’s growing Robusta output and potential consumer resistance to higher retail prices provide countervailing forces. Market participants should prioritize weather monitoring, inventory reports, and adjustments for the contract re-denomination while watching downstream demand signals closely, as those will determine whether recent price gains are sustained or eventually ease.