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MILAN – Coffee futures markets continue to rise from the lows seen at the beginning of the week. In New York, the Contract for December delivery of the ICE Arabica, after hitting a two-week low on Tuesday, closed higher in the following two sessions, ending yesterday, Thursday 30 October, at 392 cents. In London, the contract for January delivery of the ICE Robusta gained 4.6% in three days from Monday’s lows, closing yesterday at $4,641.
The weather in Brazil has improved somewhat, and forecasts of rain in key coffee-growing areas, which would partially alleviate the dry conditions, contributed to the declines earlier this week.
Vietnam has seen mostly good growing conditions, but heavy rain from some tropical systems has been reported in some areas.
Activity remains quiet due to limited supplies, as fresh grain supplies from the current harvest have not yet peaked up,”said Jack Scoville, market analyst at The Price Futures Group, as quoted by Notícias Agrícolas.
Low stock levels continue to support prices. In New York, certified stocks fell to a new low of 446,475 bags on Wednesday. The situation is better in London, where certified stocks stand at 6,111 lots or 1,018,500 bags.
Market tensions continue to be exacerbated by US tariffs of 50% on Brazilian coffee, which accounts for about one-third of US industry imports. US roasters are using up the stocks they still have in storage and postponing purchases.
Some have cancelled orders from Brazil, incurring penalties. Others are keeping goods in storage in US ports without clearing customs, waiting for the situation to become clearer.
Finally, there are those who are diverting coffee shipments to Canada, paying heavy additional transport costs but avoiding the 50% U.S. tariff.
“We see, of course, less coffee leaving Brazil and going to the U.S., it is very clear, and roasters are using up every bag they have,” said a trader quoted by Reuters.
Prices for alternatives to Brazilian coffee including Colombian, Mexican or Central American beans have gone up by as much as 10% since the U.S. first announced the tariff on July 9 due to increased demand while prices for Brazilian beans have fallen around 5%, reports Reuters.
Meanwhile, ground and roasted coffee prices at grocery stores in the U.S. rose 41% in September from a year ago to an average $9.14 per pound, according to Bureau of Labor Statistics data.
This is primarily due to sharp increases in green coffee prices on international markets, but tariffs have contributed to worsening the situation.
