MILAN – After Friday’s sell-offs, coffee futures markets regained momentum in the first session of June buoyed by the falling dollar and lingering uncertainties on the fundamentals front. London rebounded strongly, also dragging upwards the New York market.
July ICE robusta coffee gained 3.7% yesterday and settled at $4,273, nearing April’s record highs again. July arabica coffee surged 420 points to close at 226.55 cents.
The latest COT Report from the ICE Arabica market has seen the Non-Commercial Speculative sector increase their net long position by 5.82% within the market over the week of trade leading to Tuesday 28th. May 2024: to register a new long position of 43,787 lots.
The latest COT report from the London Robusta coffee market indicates that the Speculative Managed Money Sector increased their net long position by 14.46% to register a new net long position of 24,721 lots.
Meanwhile, we are approaching the start of winter season in the southern hemisphere. This time of year is normally be dominated by a weather market, in particular by the risk of frost in the Brazilian coffee belt.
According to I. & M. Smith, the latest weather reports from Brazil are indicating that cooler weather is set to prevail for the week ahead, with temperatures in the low to mid-teens in degrees Celsius.
The coffee futures markets are digesting USDA’s latest Gain Report on Vietnam, which significantly raised its estimates for the current crop year and predicts production to remain stable for next year.
These estimates differ significantly from those of Vietnam’s Ministry of Agriculture, which forecast a 20% drop in production this year.
Furthermore, these figures appear to be at odds with Volcafe’s forecasts, which predict a crop of just 24 million bags in 2024/25, the lowest in 13 years.
If the USDA’s forecasts come true, the robusta supply deficit would be less pronounced than what has been indicated so far by most statistical sources.
Usda will publish theWorld Markets and Trade report, with its official estimates, in the coming weeks.
The Vietnamese media meanwhile report that prices at origin have risen again to above VND120,000 per kilogram in some areas of the Central Highlands.
Government data indicate that Vietnam shipped 833,00 tonnes of coffee (13.88 million bags) in the first five months of the year, 3.9% less than in the same period last year.
Exports from Sumatra, Indonesia’s top producer, declined sharply, reaching 65.768 million bags in April, down 46.4% from the same month in 2023.
