MILAN – Coffee futures markets rallied sharply yesterday, Tuesday 6 August, off the monthly low set on Monday. In London, the contract for September delivery gained almost 5% (+$208) to settle at $4383, its highest level since 25 July. In New York, September Arabica coffee contract rose 4.5% to close at 235.95 cents, its highest level in two weeks.
Both coffee futures markets were affected by signs of deterioration for production in Brazil and Vietnam. Brazilian crop estimates released in the latest weeks have downgraded production prospects for the current year, and various field reports paint a less than reassuring picture for the upcoming 2025/26 harvest as well.
As reported in recent issues of Comunicaffe International, Safras & Mercado recently cut their estimate for this year’s Brazilian crop by more than 4 million bags to 66 million.
Rabobank, on the other hand, is forecasting production of 67.1 million, compared to a previous estimate of 69.8 million.
On top of that, Cooxupé, Brazil’s largest coffee cooperative, said yesterday that it no longer expects increase in production this year in the area where it operates in the Brazilian states of Minas Gerais and Sao Paulo due to dry, hot weather.
According to the cooperative’s vice president, Carlos Augusto Rodrigues de Melo, Cooxupé will receive less than 7 million bags this year.
The weather situation in Brazil is also worrying: according to the National Institute of Meteorology (Inmet), a mass of cold air is arriving over Brazil that could bring temperatures close to freezing over the coming weekend.
Also worrying is the drought experienced in recent months, which has exacerbated water deficit in producing areas.
Good news, however, came from Colombia, where production increased by 22.4% to 1,159,000 bags in July.
This brings the total for the first 10 months of the 2023/24 coffee year to 10,629,000 bags: 19.6% more than in the same period of 2022/23. July exports totalled 1,005,000 bags, up 18% from the same month last year. Exports for the first 10 months reached 9,798,000 bags, up 7.9%.
