MILAN – Coffee futures markets continued to recover after the sharp falls of the first two days of the week, when Ice Arabica and Ice Robusta lost 7.1% and 14.5% respectively. Yesterday, Thursday 5 December, both exchanges closed, for the second consecutive day, on a consistent upward trend. This time, the lion’s share of the gains went to New York, where the March contract rose 3.2% (+980 points) to settle at 313.50 cents.
In London, the January contract was also up 2.6% (+125 points) to $4,895.
The weakness of the greenback continues to boost the performance of both coffee markets, adding to the problems on the production side, as rains in Vietnam continue to hamper harvesting and Brazil’s crop prospects remain uncertain.
There is also concern in Brazil about the fate of Atlântica Exportação e Importação SA and Cafebras Comércio de Cafés do Brasil SA (both owned by Grupo Montesanto Tavares), which are in serious financial difficulties.
In fact, the two companies were denied their joint request for a 60-day grace period on debt repayment as they negotiate with creditors in order to avoid filing for bankruptcy.
“I understand the plaintiffs’ crisis situation, which has been well demonstrated, but to require such creditors to bear the burden for 60 days, with all due respect, is unreasonable,” the judge said in a Dec. 3 ruling quoted by Bloomberg News.
Lawyers for the two companies are considering further legal action.
The documents produced by Montesanto include a list of companies to which Atlântica and Cafebras owe around R$530 million ($87.8 million) in the form of margin calls, which includes Cargill as well as Marex Group and Banco Pine SA among the main creditors.
In addition to margin commitments related to coffee derivatives, Atlântica and Cafebras also listed among their main creditors some of the top banks in Brazil.
Meanwhile, world exports continue to soar. According to the ICO’s new monthly report, released yesterday evening, world exports of all forms of coffee totalled 11.132 million bags in October, up 15.1% from the same month last year.
All coffee categories performed well.
Arabica shipments rose by 13.1% to 7.508 million. There were double-digit increases in Brazilian Naturals (+12.9% to 4.533 million) and Colombian Milds, whose exports rose by almost a quarter (+24.3%) to 1.231 million. Other Milds saw a 6.8% increase, to 1.744 million.
Exports of Robustas also rose sharply, by 19.4% to 3.624 million.
