MILAN – Arabica coffee futures Wednesday continued their unabated rally. In yesterday’s (Wednesday 29th January) session, the March contract in New York gained a further 905 points (+2.5%) to close at a new all-time nominal high of 366.55 cents (intraday at 369.45 cents). London was 0.9% up to settle at $5,609.
“Global coffee supplies remain limited. Vietnam is progressing slowly with sales of its robusta crop. The arabica harvested in Central America and Colombia is taking longer to get to the market, and Brazilian farmers don’t show much interest in selling more,” broker HedgePoint Global Markets told Reuters.
Strength in the Brazilian real, that rallied to a 2-month high against the dollar Wednesday, also seems to be discouraging export selling from Brazil’s coffee producers.
According to French commodities broker Sucden, also quoted by Reuters, Brazil’s buffer stocks are now down to the bone: barely 500,000 bags, compared with a normal level of around 8 million.
The very low level of stocks makes the market even more vulnerable and exposed to speculation, especially in the event of new adverse weather events in Brazil’s coffee belt.
Sucden also predicts a fourth consecutive supply deficit in the world coffee market this year.
Negative forecasts for India’s coffee production and exports. The 2024/25 crop is expected to decline due to adverse weather conditions in Karnataka and Kerala.
“We have not yet finalised the number for the current season’s production. We are receiving reports of lower yields. Our estimate will be finalised after conducting a detailed survey,” said an official with Coffee Board.
High temperatures in April and May affected flowering and fruit formation. This was followed by above-average rainfall during the monsoon season in all major producing districts.
The Coffee Board estimated production for 2023/24 at 6.24 million bags, of which 4.35 million were Robusta. Exports in 2023/24 amounted to 4.92 million bags. A 10% decline is expected for the current year.