MILAN – Coffee futures markets were mixed in trade on Tuesday. Arabica futures ended the year on a lower note in thin trade ahead of the New Year holiday. The New York benchmark contract for March delivery ended 245 points down at 129.70 cents. March Robusta coffee rose $7, to $1,382 a tonne.
Coffee’s rally in late 2019 took many traders and analysts by surprise. Arabica beans have surged 28 per cent since the end of September, marking the best quarterly performance since 2014 and the biggest gain among major commodities in the last three months.
The move came after futures in May tumbled to the lowest in 13 years, threatening the economic sustainability of the coffee growers in many producing countries.
“Coffee prices have rallied considerably in recent weeks as concerns regarding low Brazilian stocks and dry weather in Vietnam have led to a significant rally in speculative sentiment,” Fitch Solutions said in a market note. Large speculators covered a net short position in arabica coffee during November and early December and are now extending a net long, CFTC data showed.
The latest Commitment of Traders report from the New York arabica market shows the Non-Commercial Speculative sector of this market increase their net long position within the market by 7.45% over the week of trade leading up to Tuesday 24th December to register a new net long position of 21,543 lots.
Most analysts maintain that the 2019-2020 crop year will end in a deficit, although carryover stocks are expected to offset tightness of supplies.
On the other hand, Robusta futures recorded a significant downtrend in prices over the course of 2019. The benchmark contract fell 8.6% or US$130 from US$1,512 on January 2nd to to US$1,382 on December 31st.
