Wednesday 24 July 2024
  • La Cimbali

Arabica coffee futures rally to 7-year highs on default concerns and increased logistical issues

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MILAN – Arabica coffee futures rallied to 7-year highs on Tuesday: the main contract for December delivery posted a daily gain of +4.3s to settle at 213.15 cents, the highest level on record for the first position since October 2014. Robusta futures for November delivery rose 2.1% to $2,144 in the wake of the rally in New York.

Prices were pushed higher by Monday’s news from Reuters reporting that coffee growers in Colombia defaulted on 1 million bags of coffee following a surge in global prices.

The default is prompting exporters of Colombian coffee to scramble to obtain coffee supplies on the cash market.

The price hike comes on the backdrop of a supply deficit expected in the current coffee year. Logistical problems, freight issues and lower coffee availability in the physical market have sparked a run on coffee stocks.

Signs of smaller supplies in Brazil have also sparked fund buying of coffee futures.

ICE certified arabica stocks are down 11.5% since the beginning of September.

The US Green Coffee Association (GCA) will release on Friday data on stocks in in US port warehouses.

The Certified washed Arabica coffee stocks held against the Ice Arabica reached 1.914.494 bags on Tuesday.

Of this, a total 1,046,975 bags, or 54,7% of the coffees registered and stored in consumer country certified warehouses of the exchange were Brazil washed arabica, and a further 40.1% of these certified coffees, originating from Honduras.

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