MILAN – Arabica coffee futures in New York settled again higher on Thursday. The most active contract for May delivery gained 440 points to close the session at 112.70 cents. Robusta futures in London closed $11 down at $1.216. There are growing concerns of disruptions in the supply chain due to the Coronavirus pandemic that may cause delay to ports and other transport operations.
In addition to that, the ICE Exchange stated that it can no longer ensure that the sampling and grading process will be completed in time for the expiration of the May Arabica coffee futures contracts. ICE also cut the delivery limits on coffee futures contracts to 1,000 lots from 7,500 lots.
The spread of the disease is making trade more difficult and many countries reporting a shortage of containers. Coffee supplies, especially for high quality Arabicas, are already tight and there is uncertainty over whether stevedores in top producer Brazil will eventually go on strike after a meeting Friday.
A group of almost 50 agribusiness associations has sought support from the federal government to guarantee Brazilian ports continue to operate amid the coronavirus crisis, according to Reuters.
In the letter addressed to President Jair Bolsonaro and Infrastructure Minister Tarcísio Gomes de Freitas, farmers and food processor groups urged action against any potential port disruptions.
The letter was motivated by the threat of dockworkers halting activities at Latin America’s largest port in Santos. Losses to agribusiness supply chains would be “incalculable” if Santos port in particular was to be stopped by unionized dockworkers, the entities said.
On Wednesday, Santos port operators, dockworkers and port authorities agreed on measures to ensure the port stayed open while enforcing policies to protect the health of all personnel involved in port activities.
Meanwhile, some of the world’s largest coffee traders are bracing for supply-chain disruptions as the coronavirus pandemic threatens to cause delays to ports and other transport operations.
According to Bloomberg, Volcafe Ltd. told clients that logistical holdups are expected to become “more widespread” throughout major producing countries, according to a memo sent to clients.
“We remain very concerned that government mandates or the lack of third party personnel to provide essential logistics services could create disruption that may be hard to manage or effectively control,” said Trishul Mandana, managing director of Volcafe.
“We are monitoring and managing the situation closely.”
Sucafina SA encouraged buyers to place orders as soon as possible to ensure they receive their beans in time, the Swiss trader said in a separate memo quoted by Bloomberg.
Sucafina said the company doesn’t currently foresee disruptions to services from its warehouses or offices. Neither is it expecting any shipment delays, but the situation is “fluid and evolving,” according to the memo.
“This may be a good time to consider taking advance shipment of coffee you have on contract or think you might need in the near future,” the company said in the memo.