MILAN – Coffee futures prices fell partially in yesterday’s session (Thursday, 26 December). The Ice Arabica contract for March delivery fell 395 points yesterday and to close at 324.65 cents, losing much of the gains made in the previous three sessions. London observed a one-day closure for the Boxing Day holiday. In the pre-Christmas session, the March expiry contract settled at $5041, up a further $33.
The New York coffee futures market was under pressure due to the weakness of the Brazilian real. A weak real usually encourages export selling by Brazil’s coffee producers.
A further bearish factor is the rebuilding of Ice Arabica certified stocks, which are now close to one million bags and have recovered strongly from the lows reached in November 2023.
The latest Commitment of Traders report from the New York Arabica coffee market has seen the Non-Commercial Speculative decreased their net long position by 2.78% within the market over the week of trade leading to Tuesday 17th December 2024, to register a new net long position of 38,156 lots.
The last days of the year are usually characterised by low volumes. After this year’s huge price increases, traders are peering into the crystal ball to try to understand how the market could evolve in the year to come.
Market participants are monitoring the Vietnamese harvest, which is currently underway, and are waiting for the first reliable estimates on upcoming Brazilian harvest, which are likely to be released in the coming weeks.
They will also keep an eye on the Bloomberg Commodity index, which is expected to rebalance its portfolio during the middle two weeks of January.
In Vietnam, unseasonal rains continue to affect coffee harvesting and processing. According to local sources, 20-30% of production has yet to be harvested and there are fears that the rain could also affect the quality of the beans.
According to Reuters, domestic prices in the Central Highlands are around 122,500 dong ($4.82) per kilo, slightly lower than last week. Traders are offering coffee at a discount of $100-150 to the March London contract.
