Tuesday, July 23, 2024

Arabica futures fall sharply in the last two sessions of the week

MILAN – Arabica coffee futures reached their highest levels since mid-June on Wednesday, but then fell sharply in the last two sessions of the week. In New York, the front month rose to a 5-month high of 180.80 cents per lb on November 15. The trend was reversed on Thursday and Friday, with the first position losing 985 points to end the week at a 1-1/2 week low of 170.95 cents.

Long liquidation pressures were due to forecasts for rain in Brazil early this week, which should boost soil moisture levels and improve yield prospects.

In the short term, Arabica remains underpinned by supply tightness, with ICE-certified stocks at their lowest in 24 years. Ice Arabica’s certified stocks fell on Thursday to a new 24-year low of 289,699 bags.

London’s main contract (January) rose to a two-month high of $2,566 on Thursday, but subsequently lost ground on Friday, concluding the week at $2,521. ICE-monitored Robusta coffee inventories were the same day at 3,873 lots, modestly above the record low of 3,374 lots posted on August 31.

In the latest round of independent forecast updates, Rabobank said that they foresee the global coffee balance sheet to record a 6.80 million bag surplus for the 2024/25 coffee year.

This is based on improved production figures that are anticipated to come from both Brazil and Colombia. Rabobank expects global coffee production for the current year to reach 174.80 million bags versus global coffee demand of 173.20 million bags, which global inventories aside, marks a marginal coffee surplus of 1.60 million bags for the 2023/2024 year.

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Consumers can expect some relief from food inflation next year, with the price of key staples such as sugar, coffee, corn and soybeans set to ease as supplies adjust higher in response to three years of soaring prices, Rabobank said in a separate report.

According to Safras, Brazilian producers had sold 64% of their 2023/24 crop as of Nov. 13, up 8 percentage points from the previous month, but slightly below the 65% sold by this time in 2022 and the five-year average of 66%.

Sales of arabica coffee reached 60% of the expected production, below the 64% long-term average, while deals for robusta coffee were estimated at 72%, above the 66% five-year average.

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