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MILAN – The downward trend in Arabica coffee futures continues. Over the first three sessions of the week, the ICE Arabica contract for September delivery fell by 6.8 per cent, closing at 322.30 cents on Wednesday, 18 January. The New York market was closed yesterday for Juneteenth, a federal holiday commemorating the abolition of slavery in the United States.
Across the pond, London fluctuated within a very tight trading range, closing with modest losses. September ICE robusta coffee futures finished the day down $4, reaching a new low of $3,887.
Brazil coffee prices are starting to stabilize at lower levels after a surge driven by speculative trading, Nestlé CEO in Brazil Marcelo Melchior said in an interview on June 18.
With Brazil beginning its harvest and Vietnam expected to boost output, global coffee prices have fallen sharply from earlier highs.
“The market trend is for a reduction in the price of raw materials, but we have to see if there will be any frost [in Brazil],” Melchior said in an interview with Reuters.
“There were a lot of people who entered the market to buy futures … these funds have already exited or are exiting the market, and now only those interested in the raw material remain,” Melchior also said.
The risk of frost is currently very low, which is why coffee futures prices are falling and speculative appetite is decreasing.
The positive outlook for the next harvest in Vietnam is also contributing to the decline in Robusta futures prices.
Swiss food giant Nestle said on Wednesday that it will invest 7 billion reais ($1.27 billion) in Brazil between 2025 and 2028.
Melchior said that this decision confirms Nestlé’s confidence in Brazil, which is is Nestle’s third largest market, in spite of a complicated economic situation with high interest rates and persistent inflation.
“Our focus is on strengthening the ‘core,’ making key categories premium and accelerating brands with high potential,” Melchior said about plans for this year.
“We have been present here for 103 years and have seen it all. We strongly believe in the potential of the Brazilian market and, above all, in our ability to adapt to any scenario,” said Melchior in a separate interview with Valor Economico, the largest financial newspaper in Brazil.
