MILAN – Arabica coffee futures ended the week on a low-key note on Friday on the outlook for rain in Brazil. Weather forecasts from the Brazilian National Institute of Meteorology showed solid chances for rain in Brazil’s coffee-growing regions over the next five days. Somar Meteorologia reported that Minas Gerais received 79 mm of rain or 393% of the historical average the previous week.
The all-important flowering period for Brazilian coffee trees begins this month and abundant rain may boost coffee tree flowering increasing coffee yields.
Arabica coffe futures for December delivery on Friday closed down -2.8% to 203.40 US cents, while ICE Robusta coffee futures for November delivery fell $25 to $2,110.
Coffee analysts and traders said on Friday during the annual conference organized by the Swiss Coffee Trade Association (SCTA) that transportation problems are preventing available supplies from moving quickly to meet demand in some areas of the world, boosting prices for the commodity.
“When you have a global supply deficit, you will look for stock draws. High prices would boost transportation (of available coffee), but that is really not happening,” said Ben Clarkson, head of the coffee platform at Louis Dreyfus, quoted by Reuters.
“There are clearly risks of higher prices. The market is scrambling for some kind of equilibrium but has not found that yet,” Clarkson added.
“We believe in a deficit of around four million bags, other analysts see it as high as seven million bags,” said Carlos Mera, head of agri commodities market research at Rabobank, adding that exports from Brazil and other producing countries have been slow due to shipping bottlenecks, Reuters also reports.
Nhung Ly, managing director at COMCO Trading in Vietnam, said the Asian country, the world’s second-largest coffee producer, will have a large 2021/22 coffee production on top of already big carry-over stocks, but companies have been struggling to move that coffee out of the country.