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MILAN – Coffee futures prices are recovering, while Vietnam remains on tenterhooks awaiting the arrival of this year’s deadliest typhoon. The ICE Arabica’s contract for December delivery gained 835 points (+2.1%) yesterday, Wednesday 5 November, closing at 413.60 cents, approaching October’s highs.
Gains were more modest in London, where the contract for January delivery rose by a mere $5 to settle at $4,686.
Both markets continue to closely monitor weather developments in Brazil and Vietnam.
In Brazil, rains in the coffee belt have been below seasonal averages, and the lower rainfall could negatively affect the development of the new crop.
In Asia, Typhoon Kalmaegi, a storm that has strengthened into the equivalent of a Category 4 Hurricane, is expected to hit central Vietnam Thursday night. The typhoon could also damage Robusta crops in Vietnam’s coffee-growing areas. This as the world’s largest Robusta coffee producer has begun harvesting the new 2025/26 coffee crop.
On Kalmaegi’s heels, another tropical storm Fung-Wong – is expected to intensify and could become a dangerous Category 3 or 4 over the weekend, reports the Joint Typhoon Warning Center, threatening more flooding and damage to the northern portions of the Philippines’ Luzon Island.
ICE Arabica certified stocks continue to shrink, falling yesterday to a new low of 429,770 bags, with 87.8% of these stocks held in Europe.
Meanwhile, news sources report that some major traders are sending around 150,000 bags of Brazilian coffee to certified warehouses in European ports in a move aimed at alleviating low inventory levels, which are approaching the historic lows of two years ago.
“We are sending 60,000 bags,” said the Brazil-based coffee trading head at one of the world’s largest agricultural commodities trade houses in an interview with Reuters, confirming that his company was one of those shipping the beans and adding that it would look to send more if the trade pans out.
The stocks will be tendered against ICE’s front-month Arabica contract, which expires on December 18, but one of the sources said he expects another 100,000 60-kg bags will arrive ahead of the second-month contract, which expires on March 19.
Traders started making plans to ship the coffee in August, when physical prices in Brazil for grades that can be certified at the exchange fell to a discount of around 18 to 20 cents per lb versus the front-month ICE contract, reports Reuters.
The Brazil-based coffee trading head said there are about 12 cents per lb of logistics costs involved in shipping coffee from Brazil to Europe, so “any discount wider than that makes the trade profitable,” concluded Reuters.
