Tuesday 23 July 2024
  • La Cimbali

Robusta futures bounce back amid crop concerns

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MILAN – Robusta futures bounced back above the $4,000 mark on Wednesday the 19th. On the other side of the pond, New York was closed for the Juneteenth holiday. In London, the main contract for September delivery gained 1.7% yesterday to close at $4,060, fully recouping the previous day’s losses, but remaining well off the highs seen earlier in the month.

The Robusta market continues to be heavily influenced by crop development in the major producing countries, starting with Vietnam.

The rainy season has arrived late and there are fears that rainfall will not be sufficient to offset the damage caused by drought in recent months.

As a result, the 2024/25 crop will at best be in line with this year’s disappointing harvest, but could be significantly lower.

In Brazil, weather forecasts for the rest of the week indicates favourable conditions for harvesting in the coffee belt, with dry weather and temperatures above 10°C.

According to I. & M. Smith, there are continued reports of lower bold bean intake and uneven ripening, compared to the harvest results of the same time last year.

This uneven ripening might prove problematic for the Arabica areas and farms that are traditionally set up for automated harvesting processes.

These factors have seen the internal market prices for bolder bean grades continue to climb, despite the comparatively firm current coffee futures market environment, says the same source.

The logistical situation in Brazil remains precarious. According to the Detention Zero (DTZ) report – compiled by ElloX Digital in collaboration with Cecafé – 216 export ships, out of a total of 402 container ships transporting coffee, experienced delays or changes in port calls during the month of May.

Tanzania coffee production is set to increase next year. According to the latest report from USDA’s Foreign Agricultural Service, the African country is forecast to produce 1.5 million bags in 2024/25, of which 800,000 being Arabica and 700,000 Robusta, from 1.4 million bags in MY 2023/24, due to favourable weather conditions and the maturation of plantations that have been undergoing rehabilitation since 2018.

According to the Tanzania Coffee Board (TCB) by November 2023, 13 million improved seedlings had already been distributed to farmers, and there are plans to distribute 25 million coffee seedlings by the end of 2025.

Harvested area is anticipated to remain at 265,000 hectares, as the government of Tanzania is focused on the rehabilitation of existing coffee farms than opening new farms or repurposing existing plots.

USDA will release today, Thursday 20 June, its new semi-annual World Production, Markets, and Trade Report containing its official estimates of world production, consumption, exports, and stocks.

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