MILANO – Coffee futures markets recovered slightly this week, despite Friday’s falls, against the backdrop of a fundamental picture that remains uncertain. The Ice Arabica September contract closed down 535 points at 225 cents on Friday the 21st, 60 points higher than the previous Friday. The September Ice Robusta contract gave up $72 to close at $4104, $95 above the previous week’s close.
Figures from the USDA’s new Coffee: World Markets and Trade report contributed to a partial retreat in both markets in the final session of the week. However, the outlook for the two main producing countries – Brazil and Vietnam – remains uncertain.
Safras & Mercado’s new update on the progress of the 2024/25 crop in Brazil describes a less promising situation than initially assumed. Harvesting operations are advancing quickly, taking advantage of the dry climate.
According to SAFRAS’ weekly monitoring, through June 18, 44% of the 2024/25 crop had already been reaped, up 7% compared to the previous week.
The conillon harvest reached 62% of the potential production, up from 56% last year and from a five-year average of 59%.
The harvest result is below expectations, which should result in a downward correction in the production estimate.
The current idea is for a cut of 8% to 14% from the preliminary forecast, although some regions are already recording losses of up to 20% from the perspective seen before the start of the harvest.
The Arabica harvest has worked at a slower pace but is still well advanced compared to previous periods. 35% of the production potential have already been reaped, surpassing both the same time last year and the 5-year average, both at 31%.
The smaller coffee bean size continues to be a great concern due to the difficulty in obtaining the screen 17/18.
“There are also growing rumours in the market about a possible negative correction in Arabica numbers” reports SAFRAS. “Another point is that growers continue at a slower drying and processing procedure, leaving post-reaped coffee to rest for longer, which favours the cup quality but also explains the little coffee available in trading regions.”
Usda has revised upwards its estimates for this year’s Vietnam harvest and expects a minimal drop in production (just 100,000 fewer bags) for the coming crop year.
Reports and testimonies from the field, however, paint a very different picture.
The Mercantile Exchange of Vietnam (MVX) expects a drop of between 10 and 16% in next year’s output due to the extreme heat wave that hit the Central Highlands, between March and early May.
The return of rain in recent weeks has given some hope to producers, but the drought may have caused irreversible damage to crops.
The situation appears to differ greatly from region to region. Areas with abundant water reserves have managed to alleviate the water deficit by making greater use of irrigation.
Many farmers have managed to cushion the impact of the drought through various expedients and proper farming practices.
