MILAN – Coffee futures prices eased further from recent peaks on Monday on positive weather news from Brazil. In New York, the most active contract for September delivery lost 515 points to settle at 181.50 cents per lb, down from a 1 and ½ month high reached on Thursday.
In London, the main contract for September delivery fell $21 to $2681, from last week’s record high of $2,790. Analysts said speculators at Ice Robusta had been expanding a net long position against the backdrop of tight supplies.
Last Friday’s weekly Commitment of Trader’s (COT) report showed funds boosted their net-long Robusta coffee positions by 680 in the week ended June 6 to 44,534, a 17-month high.
Somar Meteorologia reported Monday that the state of Minas Gerais, in the Arabica coffee belt region, received 0.2 mm of rain in the week ended June 11, or 2% of the historical average. Dry conditions in Brazil that are accelerating the pace of the country’s coffee harvest.
SAFRAS’ weekly monitoring indicates that up to May 6, Brazil reaped 26% of the 23/24 crop, which corresponds to an increase of 6% compared to the week earlier. Work exceeds the same time last year, when growers had reaped 24% of the crop, and is slightly below the five-year average with 27% of the reaped production.
The Arabica harvest is 20% complete, against 17% at the same time last year and 19% on average for the last 5 years. The conillon harvest is at 38%, above the 36% at the same time last year, but still below the 42% five-year average.
Meanwhile, El Nino is back in action. Last week, the NOAA (National Oceanic and Atmospheric Administration) officially confirmed sea surface temperatures across the equatorial Pacific Ocean had risen 0.5 degrees Celsius above normal, and wind patterns have changed to the point where El Nino criteria have been met.
According to a study published in the Science Magazine, this year’s El Nino could cause economic losses to the tune of $3 trillion dollars. This pattern typically brings heavy rains to Brazil and drought to India, negatively impacting coffee crop production.
A strong El Nino could also massively affect sugar production in India and Thailand while also potentially affecting Brazil’s sugarcane harvest.
