Saturday 18 May 2024
  • Triesteexpresso

Robusta coffee futures near the $4,000 mark, Arabica prices at their highest since October 2022, due to climate worries and tight supplies

The fundamentals picture is virtually unchanged. However, high uncertainty on the logistical front, the worrying drought in Vietnam and fears of new unforeseen climatic events linked to the transition from El Niño to La Niña (the latter having a 60% probability to occur by August, according to the US government's Climate Prediction Centre) are keeping traders on edge as the market grapples with historically low stock levels

Must read

  • Dalla Corte
TME - Cialdy Evo
Demuslab

MILAN – As the coffee world gathered in Chicago for the Specialty Coffee Expo – Sca’s premier overseas showcase, held from Friday 12 to Sunday 14 April – futures markets recorded a week of new highs for Robusta and strong gains for Arabica. On Friday, London hit new all-time highs. May soared to an intraday high of $3,956.

The trend then reversed, with the day’s close at $3,900, up $57 from Thursday and a new 10-T contract high.

La Cimbali

The most active contract for July delivery, in turn, gained $62 to end the week at $3,852, up 4.7% from the previous week.

Friday was a turbulent day in New York: the front month (May) catapulted into the $2.30 area, reaching an intra-day high of 236.20 cents.

Gimoka

The depreciation of the Brazilian real to a six-month low against the dollar then triggered some profit taking.

However, the session ended with the fourth consecutive advance to 224.65 cents, 430 points above Thursday’s close and the higest level since October 2022.

The main contract for July delivery gained 310 points to close at 220.45 cents.

The fundamentals picture is virtually unchanged. However, high uncertainty on the logistical front, the worrying drought in Vietnam and fears of new unforeseen climatic events linked to the transition from El Niño to La Niña (the latter having a 60% probability to occur by August, according to the US government’s Climate Prediction Centre) are keeping traders on edge as the market grapples with historically low stock levels.

Climate and weather are becoming increasingly unpredictable, adding to the volatility of agricultural commodity markets. This high level of volatility, say analysts, may be the new normal that we will have to get used to.

In addition to that, the EU’s new anti-deforestation regulation, which comes into force at the end of this year, is in turn sending shockwaves through the global supply chain and is causing anxiety in producing countries, especially the poorer and less organised ones.

Meanwhile in Vietnam, domestic prices continue to rise at a rate of 1,000 dong a day, and have now reached a new all-time high of 110,000 dong a kilo ($4.39) in Dak Nong province.

This comes at a time when lack of rainfall and intense heat are dangerously depleting soil moisture and reservoir levels.

According to trade sources, there is at least 300,000 tonnes of coffee sitting in the warehouses of Vietnamese producers and traders. But many dispute this estimate, arguing that it has no solid basis. According to Carlos Mera, head of agricultural commodities at Rabobank, ‘there is very little coffee left in Vietnam’. There are also fears that the difficult availability of the product and the very high prices could severely disrupt the supply chain in Vietnam.

According to the latest customs data, Vietnam exported 189,000 tonnes of coffee (3.15 million sacks) last month, up 17.7 per cent on March 2023.

CIMBALI

Latest article

  • Franke Mytico