MILAN – Coffee futures ended the week on a high note, with ICE Arabica reaching a three-week high on Friday. The New York market ended flat on Monday, however, it rebounded in positive territory in the subsequent days and surged strongly in the final session of the week, posting a gain of almost 4% to close at 144.90 cents per pound, following an intraday peak of 155.65 cents.
London coffee futures experienced a slight decline in the first session of the week, but recovered in the following days to end the week at $2,388, still below the monthly highs recorded in the early days of October.
A lack of selling by Brazil’s coffee farmers is keeping supplies tight in the cash market and is pushing prices higher, according to barchart. The recent price weakness in coffee has encouraged farmers to store coffee beans rather than sell them.
In London, dealers said funds had started to cover short positions while there continued to be concerns that the El Nino weather event could curb production in South East Asia.
Ice Arabica certified stocks fell Friday to 440,773 bags, of which 277,881 originating from Honduras and 139,635 from Brazil, still close to the historic lows reached last year.
The latest Commitment of Traders report from ICE Arabica has seen the Non-Commercial Speculative sector increase their net short position by 8.91% within the market over the week of trade leading to Tuesday 10th October 2023, to register a new net short position of 24,406 lots.
The latest COT from the London Robusta coffee market has seen the Speculative Managed Money Sector decrease their net long position by 52.72% within the market over the week of trade leading to Tuesday 10th. October 2023, to a new net long position of 9,266 lots.
In a recent report, Rabobank lowered its estimate on world coffee production for 2023/24 to 172.6 million bags, roughly on par with demand.
Meanwhile, climate maps indicate a better rainfall situation for the main coffee areas in Brazil over the next few weeks, with the accumulated volume increasing especially by the end of October. A situation very favourable to a new blossoming and the post-blossoming period, according to a recent report from Safras.
Climate models also indicate good accumulated moisture in November and December, which reinforces the positive signs for the next Brazilian crop.
The preliminary idea is that the country will reap a larger Arabica crop in 2024 than it did in 2023, but still below the last record of 50 million bags hit in 2020. Robusta production should remain unchanged, says Safras.
