MILAN – Coffee futures traded in a thin range on Wednesday: the benchmark contract for March delivery moved between an intraday high and low of 99.25 and 97.55 cents per pound respectively to close the day at 97.75 cents, down 40 points. March ICE Robusta coffee also closed down US$8 to a new 3-1/4 month low of 1,264.
Coffee futures in New York have plunged more than one-fifth since the start of the year. This is a bigger dip than crude oil marker Brent, down 17%, and copper, which has lost 9% on the London Metal Exchange.
According to the Financial Times, this slump in prices is also a consequence of the Coronavirus outbreak.
The price of arabica coffee has been falling since the beginning of this year, roughly the same as increasing concerns about the new pandemic in China.
“China is an important participant in the global coffee industry, with imports more than tripling over the past decade”, writes the daily.
“That, combined with the nation’s potential for significantly higher forecast growth, has unsettled investors” even though China accounts for only about 2 per cent of global consumption, according to Rabobank.
Both Starbucks and Luckin Coffee decided to temporarily shut stores in response to the outbreak. These closures are “reinforcing the bearish trend in global coffee prices”, said Carlos Mera at Rabobank.
Shares in the two retailers have slumped, with Starbucks down 6 per cent since their January peak and Luckin Coffee losing about a third.
“What happens next depends on two factors: how long the outbreak lasts and whether it saps demand for the commodity from other countries in Asia and beyond” concludes the daily.