MILAN – Coffee futures markets jumped again on Wednesday, on the eve of ‘D-Day’. The European Parliament will vote today on the Commission’s proposal to postpone the implementation of the European deforestation law by one year, as well as a series of amendments that could change the scope of the law.
In yesterday’s session, Wednesday, 13 November, the Ice Arabica March contract gained another 810 points (+3.1%) to close at 271.20 cents, the highest level for the benchmark since late September.
Coffee futures in London for January delivery appreciated 2.1% (+$95) to end the day at $4,632, its highest level in three weeks. Several factors contributed to keeping markets on edge catalysing speculative buying.
Starting with the situation in the world’s two largest producing countries. In Brazil, producers are holding coffee supplies back from the market in hopes of higher prices. Fuelling these bullish expectations are the uncertain prospects for the development of the new harvest, whose potential has already been significantly reduced by months of drought.
There is also concern about current weather developments and forecasts of continued dry and hot weather.
The Cepea/Esalq indicator for Arabica type 6 meanwhile rose to its highest level since early 2022. In Vietnam, recent bad weather has slowed down harvesting operations, which come into full swing at this time of year.
But the issue that holds centre stage in the coffee market and beyond is that of the Eudr. The Commission’s proposal to postpone by one year the application of the anti-deforestation legislation arrives in the European Parliament today.
Despite an understanding that the implementation deadline would be the only substantial change, European People’s Party (EPP) – the largest group in the Parliament – has proposed a raft of amendments ahead of a final vote that would substantially weaken the law.
The EPP has tabled 15 amendment proposals, which would extend the delay to two years, introduce a new category of ‘no risk’ countries and exempt traders from the bulk of reporting obligations.
The group says in its proposal that the changes it wants are justified by a need to ‘avoid unnecessary administrative burden and the additional costs’, and is apparently counting on support from conservative and sovereignist groups to push them through.
