MILAN – Robusta futures surged to a three-week high on Wednesday nearing again the $4,000 mark, as Arabica futures also rallied. In London, the main contract for July delivery added $183 (+4.9%) to close at $3,917, not far from a daily high of $3,928. The market enjoyed further support from speculative buying amid a total absence of origin selling.
On the fundamentals front, the day was marked by a new Volcafe report predicting a further decline in Vietnam’s production, which could amount to just 24 million bags in 2024/25 – the lowest level in 13 years, as poor rainfall has caused “irreversible damage” to coffee blossoms.
The Swiss trader also sees a global Robusta deficit of 4.6 million bags in 2024/25. This would be the fourth consecutive year of deficit, although much lower than this year’s estimated shortfall of 9 million bags.
Meanwhile, the weather situation remains problematic in Vietnam, with poor rainfall forecast, which has led to new drought concerns.
In New York, the main contract for July delivery closed up 325 points at 220.45 cents. Dealers said there were some quality concerns in Brazil, where the harvest is in its early stages. The market continues to be supported by strength in the Robusta prices as well.
Brazilian coffee exports will reach a record high of 46.3 million bags at the end of CY 2023/24 (July-June).
This was stated by Carlos Alberto Santana – commercial director of Eisa, one of Brazil’s main coffee exporters – speaking on the sidelines of the International Coffee Seminar in Santos. The figure marks a strong recovery from the 35.6 million bags recorded in 2022/23.
Cooxupé, Brazil’s largest coffee coop, expects the current crop to be similar to 2023 and a significant increase for the 2025, said the president Carlos Augusto Rodrigues de Melo during the same seminar.
Honduras coffee production is expected to reach 5.5 million 60-kilogram bags in marketing year 2023/24, a 24% decrease from the previous year, says a report of the U.S. Department of Agriculture Global Agricultural Network.
The decrease in coffee production is attributed to high incidence of coffee rust and ongoing labour shortage domestically, as well as the 5% decrease in the international coffee price due to an expected production recovery in Brazil.
Consequently, MY2023/24 export forecast is 5 million bags, down 6 percent versus MY2022/23 (5.3 million 60-kilogram bags).
