Monday 20 May 2024
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Coffee futures prices close lower after reaching three-month highs

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MILAN – Coffee futures prices fell back Wednesday after reaching a 3-month and 3 and ½-month high at Ice Arabica and Ice Robusta respectively on Tuesday. The main contract for March delivery lost 585 points in New York closing the day at 175.90 cents per lb. The most active contract in London was $54 down to $2,053 a tonne.

Coffee futures prices at Ice Arabica had previously had a positive streak of eight consecutive sessions reaching a peak of 181.75 cents on Wednesday, the highest level since the end of October.

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Ice Robusta settled the same day at $2,107, the highest price since the second decade of October.

Dealers said the run-up in New York had been driven by fund short covering against the backdrop of some Brazilian physical coffee premiums rising to their highest in a decade.

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In market news, the Honduran Coffee Institute reported Honduran coffee exports in January rose +13% year-on-year to 745,975 bags.

In a new report, Rabobank forecasts a small surplus of 1.6 million bags in global coffee supply for CY 2023/24. This is significantly down from a previous estimate of 4 million bags.

The Dutch band expects Brazil’s production to increase to 67.1 million bags, from 63.2 million in 2022. Vietnam’s 2023/24 output will rise marginally (+500,000 bags) to 29.5 million bags.

Colombia’s production will rebound to 14 million bags, from 11.8 million this year.

Rabobank expects Colombia’s production to recover from a poor 2022/23 season when the country – the second largest arabica coffee producer – harvested only 11.8 million bags. It sees Colombian coffee output at 14 million bags in 2023/24.

World coffee production is seen at 174.8 million versus a global demand of 173.2 million. The latter will record a 1.6% increase over year, despite the crisis. But still below an historic average of of 2.3% during the two first decades of the century.

Retail prices in the United States for roast and ground coffee rose sharply in 4Q, says RaboResearch in a separate report.

Folgers boosted its prices as much as 50% to offset higher costs. Maxwell House, another iconic brand in the US retail market, lifted its prices by 35%, Starbucks by around 15%, the report said.

“I have been a beverage analyst for 16 years and have never seen price increases this large,” said Jim Watson, executive director, Beverages Research at RaboResearch in an interview with Reuters

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