Tuesday 23 July 2024
  • La Cimbali

Coffee futures markets rebound on tight supply, lower exports from Vietnam and Indonesia

Vietnam's General Statistics Office reports that exports dropped 40% to 1,416,667 bags in June. Exports for the first six months of 2024 were also down 7.6% to 25,255,017 bags. Data from the Indonesian government also indicate that Sumatra's Robusta exports fell by 54% to 104,425 bags in May. This brings the total for the first two months of the 2024/25 harvest year to 170,193 bags: 51.3% less than the same period a year ago

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MILAN — Coffee futures markets rebounded on Tuesday, 2nd July. In London, the benchmark settled higher for the second consecutive day and rose to $4092, gaining $25 over Monday’s close and crossing the $4,100 mark in trading. In New York, the contract for September delivery gained 245 points and closed at 227.30 cents. Uncertainty about fundamentals continued to support both coffee futures markets.

In Brazil, harvesting operations continue at a good pace helped by favourable weather conditions.

Weather forecasts predict temperatures above 10 degrees Celsius for the rest of the week, thus ruling out the risk of frost for the time being.

In Vietnam, the weather situation has improved, but the picture remains worrying, according to a recent report by Hedgepoint Global Markets.

“From May onwards, however, rainfall levels improved, benefiting coffee plantations and contributing to the development of this year’s crop. This also led to a correction in prices in May and the last few days of June,” writes Hedgepoint’s analyst Laleska Moda.

“On the other hand, we can’t ignore the fact that rainfall until June is still below the historical average, while temperatures in Vietnam remain high. In this sense, we may still have room for a correction in the 2024/25 figures, so it’s crucial to closely monitor the development of the coffee plantations,” she also notes.

Hedgepoint remains pessimistic about the upcoming harvest. “Our current expectation is a production of 27.2 million bags,” writes Moda adding that production could be higher and reach as much as 28.7 million under the most optimistic scenarios.

Meanwhile, Vietnam’s General Statistics Office reports that exports dropped 40% to 1,416,667 bags in June.

Exports for the first six months of 2024 were also down 7.6% to 25,255,017 bags. On the other hand, earnings rose by more than a third (+34.5%) to $3.2 billion.

Data from the Indonesian government also indicate that Sumatra’s Robusta exports fell by 54% to 104,425 bags in May. This brings the total for the first two months of the 2024/25 harvest year to 170,193 bags: 51.3% less than the same period a year ago.

Shipments from Costa Rica are also down. According to data released yesterday by the Costa Rican Coffee Institute, the Central American country’s exports fell by 7.6 per cent in the first nine months of the 2023/24 coffee year (Oct-Jun) to 702,097 bags.

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