Tuesday 23 July 2024
  • La Cimbali

Coffee futures prices down at the end of the week on greenback’s strength and a risk-averse mood

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MILAN – Coffee futures prices stabilised last week, with New York almost unchanged on the previous Friday and London partially down. The performance of both markets was affected by the by dollar’s strength and a risk-averse mood in the financial markets. The contract for September delivery of Ice Robusta closed Friday, 14 June, at $4,009, down $84 from Thursday and $119 (-2.9%) below the settlement of Friday, 7 June.

This is the lowest price for the main contract since the end of May. The market is still in backwardation.

Coffee futures prices for September delivery at Ice Arabica coffee lost 185 points in Friday’s session, ending the week at 224.40 cents, just 50 points lower than the previous Friday.

The contract’s weekly low was reached on Wednesday, 12 June, with an intraday low of 216.10 cents following Cecafé data on Brazil’s coffee exports. However, this was followed by a strong rebound later in the day, which led to a 340 point gain at the end of the day.

Ice Arabica’s latest Cot Report released on Friday shows a 1,604-lot cut in speculators’ net long positions in the week to June 11 to a total of 44,939 contracts, or 12,739,992 bags.

Meanwhile, Ice Arabica certified stocks rose further to 815,031 bags of which 682,113 bags are transition stocks, i.e. coffee stored at the same delivery points with a Bill of Lading issued on or after June 29, 2023, submitted for sampling and grading before December 31, 2024, without Validated DDI available in the DDI system.

Uganda coffee production is expected to inch higher during the next coffee year, according to a new Gain Report from USDA’s Foreign Agricultural Service. USDA will issue the next “Coffee: World Markets and Trade” biannual report containing its official estimates on production, exports and consumption on Thursday, 20 June.

Africa’s leading coffee exporter produced 6.86 million bags of coffee in 2023/24 (October/September), of which 5.87 million bags were Robusta, an increase of 4.5% on the previous year.

For 2024/25, the USDA expects a crop of 6.9 million bags, including 5.895 million bags of Robusta.

Arabica is grown in mountainous areas on the slopes of the Elgon, Rwenzori and Moroto massifs, where temperatures are cooler and soils more fertile.

Robusta is grown in the central plains of the east and west. Coffee is mainly grown by smallholders (less than half a hectare of land) in a mixed farming system, in combination with other crops such as bananas, avocados, vanilla and shade trees..

USDA estimates 2023/24 exports at 6.515 million bags, up 3.8% from the previous year. 2024/25 will see a slight increase to 6.575 million. In 2022/23, 75% of exports went to the 27 EU countries.

The implementation of the new Regulation on Deforestation Free Products (EUDR) is expected to affect coffee exports to the European Union (EU), leading the Government of Uganda pledged to register all coffee farmers and establish a National Traceability System to meet EUDR standards.

To adhere to the deadline of December 31, 2024, UCDA is negotiating with the EU to implement a Territorial Approach as an interim measure for EUDR compliance.

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