Tuesday, May 21, 2024

Coffee futures prices ease on improved weather prospects in Brazil

MILAN – Arabica coffee futures slipped yesterday from the six-month high hit on Friday. In New York, the main contract for March delivery lost 495 points (-2.7%) to end the day at 179.40 cents per lb. Improved weather forecasts in Brazil helped reverse the trend. According to reports, rains are expected to pick up pace in Brazil’s coffee areas in the second half of December bringing relief and boosting crop prospects.

Prices were also pressured by real’s weakness. The Brazilian currency fell Monday to a 1-month low against the dollar, encouraging export selling.

According to preliminary data from the National Coffee Institute of Honduras (IHCAFE), exports from Central America’s biggest producer soared 62.7% year-on-year to 110,413 bags.

Cumulative exports for first two months of the current coffee year were 17.91% higher at a total of 109,494 bags.

However, IHCAFE expects that exports from the current October 2023 to September 2024 crop year are forecast to be 6.60% lower than the previous October 2022 to September 2023 year, to reach a total of 4.98 million bags.

In London, coffee futures were also down from the previous week. The main contract for January delivery closed $26 down at $2,546. The weather in Vietnam has been favourable for harvesting thanks to cooler temperatures and drier conditions, and coffee from the new crop is starting to flow.

Analysts Safras & Mercado reported that for the next Brazil July 2024 to June 2025 crop year, production is expected to be at a level between 69 and 71 million bags.

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This figure is 5% higher than the current crop year, for which production is estimated at 66.65 million bags.

The report says that Arabica production will be between 46 and 47 million bags, while Conilon Robusta production will rise marginally to total between 23 and 24 million bags.

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