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Arabica futures prices hit one-year high amid signs of tightening supplies

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MILAN – ICE Arabica coffee futures prices fell back on Friday following a mid-week sharp rally on heavy short-covering by funds amid signs of tightening supplies that pushed prices to a one-year high on Thursday. Jan ICE robusta coffee (DFF0) settled unchanged at US$1,402, slightly up from the previous week.

March arabica coffee fell 0.60 cents to$1.1565 per lb, having hit its highest level since November 2018 at $1.1680 on Thursday.

The USDA‘s Foreign Agricultural Service (FAS) on Thursday revised downward its estimate for Brazil 2019/20 coffee production to 58 mln bags from a record crop of 64.8 million bags in 2018/19. The USDA’s FAS also forecast that Brazil 2019/20 coffee exports will slide -14.7% y/y to 35.32 million bags.

Current arabica coffee supplies continue to decline, which is also providing support to coffee prices, after ICE certified coffee inventories fell to a 15-month low of 2.145 million bags on Friday.

On the other hand, surveys of Brazil’s coffee farms are showing “satisfactory” coffee-flowering, which supports a positive outlook for the 2020 coffee crop. Brazilian coffee crop concerns also eased as after Somar Meteorologia reported Monday that rainfall in Minas Gerais, Brazil’s largest arabica coffee growing region, measured 54.5 mm over the past week, or 110% of the historical average.

In other news, Colombian unions, student groups and other protesters were marching on Thursday to insist the government maintain the minimum wage for young people and the universal right to a pension, even though the government says those are not part of reform plans.

250,000 people took to the streets in one of the nation’s biggest marches in recent history.

While the protest started out peaceful, it ended with scattered clashes between protesters and police. Three people were killed in what authorities described as violent looting incidents overnight.