Friday 14 June 2024
  • La Cimbali

Coffee futures prices slip from 1-month highs on weaker real, harvesting progress in Brazil

Dry weather in Brazil is speeding up harvesting operations in Brazil. Cooxupe, the country’s largest coffee export cooperative, reported that Brazil's coffee harvest was 66.5% completed as of July 28, ahead of the 62.8% completed at the same time last year. However, dealers quoted by Reuters said the market was ripe for an upward correction as ICE stocks decline continuously and farmers, particularly in Brazil, refuse to sell at current prices

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MILAN – Arabica coffee futures ended the week on the low side after hitting a 5-week high on Wednesday, August 2nd. The main contract for September delivery closed Friday at 161.35 cents per lb, down from a peak of 166.95 cents reached at mid-week, following ICO’s export figures showing a 6.2% decline in world coffee exports to 93.44 million bags over during the first 9 months of the current coffee year.

Weakness in the Brazilian real weighed on prices Friday after the currency fell to a 3-week low against the dollar before recovering.

Dry weather in Brazil is speeding up harvesting operations. Cooxupe, the country’s largest coffee export cooperative, reported that Brazil’s coffee harvest was 66.5% completed as of July 28, ahead of the 62.8% completed at the same time last year.

Dealers quoted by Reuters said the market was ripe for an upward correction as ICE stocks decline continuously and farmers, particularly in Brazil, refuse to sell at current prices.

“The industry had been on the sidelines recently waiting for prices to fall further, but they didn’t, so they had to cover,” said a coffee broker. “Then the funds went covering as well,” he added.

The domestic physical coffee market reacts and tries to move away from the lows, reports Safras. The recovery on ICE US and the dollar’s high served as an impetus for the rise in prices.

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But the weak differentials in FOB exports and the pressure from the arrival of new coffee on the market serve as a counterpoint, inhibiting sharper highs.

In London, the September contract settled on Friday at $2612 per lb, down from a 1-month high of $2674 hit on Wednesday.

Traders have started to ship cargoes of Brazilian Robusta beans to European certified warehouses, reports Reuters citing to people familiar with the deals.

That will allow them to deliver the coffee to buyers of futures in London. ICE-monitored Robusta coffee inventories on Thursday fell to a record low of 5,105 lots (data history back to 2016).

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