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MILAN — Opposite trends emerged for coffee futures in the two terminals during the first session of the week. On Monday 24 November, the ICE Arabica closed above Friday’s lows, with the March contract rising 1.9% to 376.55 cents. In London, the January contract ended the session down 1.9% at $4,453.
The New York market was driven upwards by dryness concerns in Brazil’s Arabica coffee belt, particularly in Minas Gerais, where rainfall over the last two weeks has been less than half of the historical average (49%).
Putting pressure on prices in London were, on the other hand, forecasts of drier weather in Vietnam’s coffee-growing areas allowing the resumption of harvesting operations in Dak Lak, the country’s largest production area, which had been interrupted by heavy rains last week.
Dealers are still trying to gauge the damage from floods and landslides caused by the recent bad weather and typhoons that hit Vietnam.
The removal of US tariffs of 40% on Brazilian green coffee imports is set to resume exports from Brazil, the world’s leading coffee producer, to the United States, the world’s leading coffee consumer, following months of decline
“(We) need the market to digest this. More downside? Maybe, but I do not believe we’ll go below $3/lb. If anything, I would be a buyer into whatever market dip comes from this news,” said a Europe-based trader at a top global coffee trade house, quoted by Reuters.
According to the trader, the global Arabica balance is still in deficit, stock levels remain very low, the industry is short on supply and needs to buy, and the impact of La Niña in the coming months must also be assessed.
Meanwhile, certified stocks of Ice Arabica rose yesterday to 405,215 bags, after falling below the 400,000 bag threshold last week.
