MILAN – Arabica coffee futures inched higher Friday at the reopening of trading following the Thanksgiving holiday. The main contract for March delivery settled 230 points higher at 165.05 cents. In London, the most active contract for January delivery posted its second consecutive day of gains to close at a three-week high of $1,857.
The most recent Gain reports from USDA‘s Foreign Agricultural Service (FAS) were supportive for the markets. FAS on Tuesday cut its estimate for Brazil’s 2022/23 coffee crop by 2.6% to 62.6 million bags.
It also cut its Colombia 2022/23 coffee production forecast by 3.1% to 12.6 mln bags from a prior estimate of 13 mln bags.
Coffee production in Vietnam for marketing year 2022/2023 (MY 2022/23) is seen at 30.22 million bags (29.2 million of Robusta), green bean equivalent (GBE), down from 31.58 bags last year, due to lower yields, despite abundant rainfall that supported the flowering and cherry setting stages.
MY 2021/22 coffee exports were revised up to 27.70 million bags, driven by increasing demand and improved logistics.
Where are prices heading next? The sharp drop in prices is mainly linked to the improved prospects for the new harvest in Brazil.
According to Carlos Marra of Rabobank, quoted by Bloomberg, “September is usually when the wet season starts, and the start of this season has been very good.”
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