MILAN – The rally in the coffee futures markets has come to a halt: in yesterday’s session, Thursday 22 August, London and New York were down after six consecutive sessions in positive territory, which had brought both terminals close to the historical highs set last month. Ice Robusta’s November contract closed down 1.3% at $4,574, $58 below its Wednesday peak of $4,632.
The Ice Arabica December contract fell 2.5% (-635 points) to close at 242.90 cents. It is worth noting that this Thursday was also the first notice day in New York, when traders can declare their intention to take physical delivery. London first notice day is due on Tuesday next week.
Long liquidation was also fuelled by a weaker Brazilian real, at a 2-week low against the greenback.
The correction in coffee futures came after the latest Brazilian weather reports confirmed that the cold front expected next weekend will not bring frost to the coffee areas, where temperatures are expected to remain in the low teens in degrees Celsius.
Meanwhile, Hurricane Gilma has formed off the west coast of Mexico in the Pacific Ocean and has been classified as a Category three hurricane.
This weather phenomenon is foreseen to be tracking in a westerly direction away from the coastline and not expected to make landfall and thus not seen to pose a climatic threat for the ripening new crop coffees within the Central American and Mexico producer bloc, according to I. & M. Smith.
In Vietnam, the weather has improved significantly and is now presenting favourable conditions for the development of the next harvest.
However, the expected arrival of the La Niña phenomenon could alter the normal seasonal pattern of precipitation bringing rainfall that could hinder bean picking and drying processes.
Domestic prices meanwhile are on the rise this week, while trade continued on a subdued note on exceptionally low supplies at the end of the crop season. According to estimations of the Mercantile Exchange of Vietnam quoted by Reuters, there were only 100,000 tons of beans harvested in the 2023/23 crop season left before the new crop starts in October.
Farmers in the Central Highlands, Vietnam’s largest coffee-growing area, were selling beans for 118,500-119,300 dong (US$4.75-US$4.79) per kg, compared with last week’s 116,900-118,000 dong, Reuters also reported.
