Saturday 15 June 2024
  • La Cimbali

Coffee futures prices skyrocket to three-week highs in London and New York amid growing supply concerns, new reports

The market players are preparing to digest Conab’s new official forecast, which is due to be released on Thursday. According to rumours, there could be a downward correction in Robusta numbers, which could push coffee futures prices even higher

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MILAN – Coffee futures prices skyrocketed on Tuesday: after a lacklustre start to the week (+10 points for New York; -19 dollars for London), London and New York rebounded strongly yesterday posting impressive daily gains. In London, the main contract for July delivery rose 6.7 percent (+$235) to end the day at $3,734, the highest level since the beginning of the month.

The Ice Arabica benchmark in turn appreciated 5.1 percent (+1,050 points) to close at a three-week high of 217.20 cents.

The fundamental picture remains unchanged. The market is characterised by a high degree of uncertainty, which makes it hypersensitive and very vulnerable to speculation. Any new market news can lead to strong fluctuations in prices.

News of new logistical problems at Brazilian ports, where a shortage of containers is slowing down shipments, were also bullish for the markets yesterday.

Furthermore, a report from Fundação Procafé, which we covered in Monday’s edition, highlighted the issue of the smaller screen size of the beans observed in the new Arabica crop.

This was confirmed by the Brazilian broker Escritório Carvalhaes, who reports that 17/18 screen size beans are under 10% in the first batches coming to the market.

Gimoka

Meanwhile, the market players are preparing to digest Conab’s new official forecast, which is due to be released on Thursday. According to rumours, there could be a downward correction in Robusta numbers, which could push coffee futures prices even higher.

Yesterday’s surge in Robusta prices is mainly a consequence of the ongoing critical situation in Vietnam, where recent rains have not been sufficient to make up for the water deficit and temperatures remain above seasonal averages.

Bad news came also from Indonesia, where USDA experts cut their estimate of Robusta production for 2023/24 (April-March) by as much as 2.1 million bags to a mere 6.3 million.

Good news came instead from Colombia. Here, Usda’s Gain Report revised upwards by 700,000 bags its production estimate for the 2023/24 crop (October-September), which is now seen at 12.2 million, up from 10.7 million in 2022/23. Export is expected to grow by more than one million bags, to 11.78 million.

Production will grow again in 2024/25, but only marginally, to 12.4 million.

Production growth remains modest as extreme drought conditions may impact both yield and harvest quality due to persistent coffee borer outbreaks that cause drastic economic loss and diminished cup quality.

According to industry, coffee borer infestation rates have increased from an average of 3% to up to 6% in some regions.

CIMBALI

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