Monday 22 April 2024
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Robusta coffee futures reach a new record high of $3,417 on the contract for May delivery

Arabica coffee futures rose marginally, with the main contract for May delivery ending the day at 185.65 cents, up 80 points from the previous session. The Robusta market faces a tight supply situation, with lower production in Asia, while demand for the bitter-taste variety is still sustained

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MILAN – Robusta coffee futures broke the $3,400 threshold on Monday and closed at a new all-time high for the benchmark contract for May delivery of $3,417, up $57 more than last Friday. However, the contract didn’t manage to break the intraday record high of $3,460, set on March 7.

Arabica coffee futures rose marginally, with the main contract for May delivery ending the day at 185.65 cents, up 80 points from the previous session.

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The Robusta market faces a tight supply situation, with lower production in Asia, while demand for the bitter-taste variety is still sustained.

Vietnam’s production is at its lowest level for the last four years, a decline attributed to climate change, lack of investment, and the shift to alternative crops. In addition, weather condition are not encouraging. Rains were seen in some areas, but there are still concerns over possible water shortage for irrigation, which may hurt the output of the next season.

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Domestic prices rose above the VNĐ 95,000 per kilo mark earlier this week, reaching VNĐ 95,300 in Dak Nong and VNĐ 95,200 in Dak Lak.

According to local reports, the recent hike in prices was impressive. In November 2023, coffee prices ranged from VNĐ59,000 to VNĐ60,000 per kilo. However, in December 2023, they had already climbed to VNĐ62,000 to VNĐ69,000. As of early March, prices surged to VNĐ86,000 per kilo and they have now escalated to a staggering VNĐ95,000 per kilo.

The rapid and substantial increase leaves many businesses unable to cope. The hike resulted in certain orders, whether on credit or placed in advance, being non-deliverable, report local sources. Consequently, companies were compelled to allocate additional funds to compensate for their losses.

Many coffee export businesses are struggling to meet deadlines for contracts signed before the sharp increase in input prices, informs Viet Nam news.

This has resulted in financial pressure, product shortages and higher transportation costs. Due to concerns about market price fluctuations, numerous coffee production and trading businesses are reluctant to accept additional unplanned or distant orders and contracts.

In Indonesia, Robusta production will fall by 20% to 8.4 million, according to estimates from the US Department of Agriculture.

Sumatra Robusta coffee beans for April deliveries were offered at $820 premium, unchanged from last week, according to one trader quoted by Reuters.

In India, the farmgate price of raw Robusta coffee berries touched a record ₹172 per kilogram (kg) in the Wayanad market on Saturday, as against ₹115 per kg during the same period last year, The Indu reports.

Meanwhile, the spot price of Robusta coffee beans stood at ₹315 per kg, up from ₹210 during the same period in 2023. The price was ₹80 and ₹145 per kg for raw berries and beans, respectively, in March 2022.

Farmers expect production to decline by 25%-30% next year too owing to a dearth of backup showers in many Robusta coffee-growing regions.

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