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Arabica futures prices skyrocket 8.4% during the last two sessions of the week

Arabica coffee futures

MILAN – Ice Arabica futures rose sharply during the last two sessions of the week. The contract for March delivery posted an 8.4% increase in just two days closing at a 2-1/2 week high of 109.10 cents. The contract for May delivery closed at 111.35 cents. The benchmark contract for March delivery at the ICE Robusta coffee closed up $11 (+0.86%) at a 1-1/2 week high.

Coffee futures prices had trended lower over the past seven weeks as Arabica coffee posted a 3-1/2 month low of 97.75 cents on February 5th. Robusta coffee dropped to a 3-3/4 month low of $1261 on February 10th and 12th.

The negative trend was exacerbated by the expectation of a global slowdown led by the Coronavirus outbreak.

Since the above-mentioned low of 97.75, New York has recorded a seven-session positive streak pushing the contract above the $1 mark. The recovery accelerated on Thursday and Friday with a two-day outstanding performance.

Strength in the Brazilian real against the dollar has also sparked short-covering in Arabica coffee after the Brazilian real rose +1.16% against the dollar Friday.

The real had rebounded from Thursday’s record low of 4.3817 reals/USD when Brazil’s central bank auctioned $1 billion in foreign-exchange swaps to boost the real. A stronger real discourages export selling by Brazil’s coffee producers.

Researcher F.O. Licht on Tuesday said the China coronavirus will hurt the results of coffee chains in China but will have only a limited impact on overall global coffee demand.