Friday 14 June 2024
  • La Cimbali

FUTURES MARKETS – Ice rallies to new highs buoyed by Brazil weather, Carnival holiday

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  • TME - Cialdy Evo

MILAN – Arabica coffee futures skyrocketed to new highs on Monday. The most active contract for May delivery surged an impressive 7.3% to a nearly two-year peak of $1.9345 a pound, while the. March coffee rose 7.1% to $1.9260 a pound.

The ICE has posted a 74% percent gain year to date. Arabica prices rose almost 42% in February alone – the biggest monthly percentage increase in almost two decades. Coffee is the best-performing commodity so far this year.

The latest Commitment of Traders report on Friday night saw a 15% surge in net-long positions to 27,866 contracts. This is the biggest increase since May 2011.

Many businesses in Brazil were closed yesterday for the four days of Carnival

With few farmers available to take the other side of a futures contract, investors looking to place bullish bets or roasters hoping to take physical delivery are forced to put in higher bids to secure a deal, traders said.

That partly explains why coffee prices rallied sharply even though 34,129 contracts changed hands, 20% below the daily average for the first two months of 2014.


According to the weather updates from Somar, a new system will bring rains back to most of Parana, Sao Paulo and Minas Gerais in the second half of the week.

However, Bahia and central and northern Minas Gerais will not get much rainfall over the next 6 to 10 days, Kyle Tapley, a meteorologist at MDA Weather Services in Gaithersburg, Md., said in a telephone interview with Bloomberg.

“Irreversible” crop damage in the nation will tip the global market into a deficit in the year starting Oct. 1 in most countries, according to Volcafe Ltd., the coffee unit of commodity trader ED&F Man Holdings Ltd.

The dry weather afflicting Brazil’s main coffee-growing region will lead to a 10% decline in coffee output this year, the country’s National Coffee Council, said last week.

The ICO reported yesterday that world coffee exports amounted to 8.65 million bags in January 2014, compared with 9.45 million bags in January 2013 (-8.38%).

Exports in first four months of coffee year 2013/14 (Oct/13 to Jan/14) have fallen by 8.7% in comparison with the first four months of the last coffee year.


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