MILAN – Coffee futures prices fell for the third session in a row on Wednesday on improved weather conditions in the Brazilian coffee belt and rising certified stocks. In New York, the main contract for May delivery lost 525 points to close at 182.80 cents per lb. In London, May Robusta coffee futures fell 2.3% at $3,090 a metric ton.
The weather forecasts within Brazil indicate good rains are due to fall across the main Arabica coffee growing regions in the week to come, reports I. & M. Smith.
This follows a period of lower-than-average rainfall for the month of February, as the country heads towards the traditionally drier winter months ahead.
Internal market trade in Brazil has been relatively lacklustre in recent days, due to the Carnival Celebrations. Internal trade is expected to remain relatively slow for the remainder of the week as market players slowly return to their desks.
ICE certified arabica stocks stood at 302,462 bags, as of February 14, up from 249,829 bags at the end of January.
“If we continue to see Brazilian rains alongside stock replenishment we could see funds cut their net long position,” Rabobank wrote in a report.
Meanwhile, coffee prices keep rising in the domestic physical market in Brazil. Good cup in the south of Minas Gerais was trading in early February at BRL 1,010 per bag, which is equivalent to USD 203.31 per 60-kg bag, reports Safras & Mercado.
Conillon type 7 in Espírito Santo remains highly valued and is far from the 5-year average, besides already operating above the market peak reached at the beginning of 2022, S&M also reports.
“The rebound in London and the greater interest from the external market serve as support for Espírito Santo’s conillon prices.
The new frustration with Vietnam’s crop, together with the increase in freight and greater difficulties on the Asia-Europe route, increases interest in Brazilian conillon, which guarantees price support. The domestic industry ended up moving away, once again increasing the share of Arabica in the blend.
The arrival of the Indonesian crop in April, combined with the expectation of greater conillon production in Brazil from April/May, should improve the supply of robusta/conillon worldwide.
In case there is a scenario of production recovery in Vietnam in the 24/25 season (Oct/Sep), Robusta production will recover from the last quarter of the year, reinforcing an upward supply trend and greater normalization of supply.
Of course, this must affect prices, which remain very inflated in the international market.
This expectation of falling prices is already part of the price curve among maturities on the London exchange”, concludes the consultancy.
