MILAN – Arabica coffee futures further eased one Friday from a 1-month highs reached during the week. In New York, the main contract for March delivery lost 225 points to end at 191.95 cents per lb. In London, Robusta coffee futures for March delivery closed down $50 at $ 3,237, after setting a contract high of $3,379 on Tuesday, but remained underpinned by supply tightness in Europe partly owing to disruption of the flow of Asian supplies through the Red Sea.
Friday’s rally in the dollar index to a 7-week high weighed on most commodity prices, including coffee.
According to I. & M. Smith, the latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net long position by 2.23% within the market over the week of trade leading to Tuesday 30th January 2024, to register a new long position of 34,110 lots, which is the equivalent of 9,670,034 bags.
The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector increase their net long position by 8.30% within the market over the week of trade leading to Tuesday 30th. January 2024: to register a new net long position of 44,116 Lots which is the equivalent of 7,352,667 bags.
Prices in top robusta grower Vietnam edged up last week though trade was sluggish ahead of the Lunar New Year holiday starting this week.
Farmers in Vietnam are refusing to deliver coffee they have sold unless contracts are renegotiated following a surge in global prices to a 28-year high, reports Reuters
This is adding impetus to the rally in Robusta prices with supplies in Europe becoming very tight also due to the current crisis in the Red Sea.
The country had its poorest crop in six years in the 2022/23 season and some contracts were rolled forward into the 2023/24 season meaning a large crop was needed for farmers to fulfil all their commitments.
This season’s harvest was, however, also sub-par.
The poor crops drove prices much higher and farmers felt they could not afford to deliver at the agreed prices and have sought to renegotiate their contracts.
Traders estimate that the delivery of between 1-2 million bags of last season’s pre-sold Vietnamese coffee – or up to 8.5% of the country’s total exports – was delayed following the harvesting of a poor crop in the 2022/23 season.
Although much of that coffee has since been delivered, it has left less coffee available for sale this season, exacerbating the price rally, says Reuters.
The Brazilian export flow is in transition to normality, after the shock with frost and loss of external space for Brazilian coffee over the last years. According to Safras & Mercado, Brazil will ship 44 million bags in the 23/24 season.
The potential is facilitated by the performance of conillon but it still requires a strong effort from the Arabica side due to the buyers’ attitude.