MILAN – It was an up-and-down week for coffee futures prices, following the sharp declines caused earlier this month by the proposed postponement of Eudr implementation and the forecast of rain in Brazil. In New York, the December expiry contract closed down 270 points (-1%) at 252.05 cents on Friday, 11 October, mainly affected by the depreciation of the Brazilian currency, at 1-month low.
In the previous three days, the Arabica market had three positive sessions, recovering most of the losses suffered in the session of Monday, 7 October, when the benchmark plunged 1,270 points to 244.65 cents.
Among the factors supporting coffee futures prices were lingering uncertainties on the weather front and falling certified stocks, which dip to a 4-month low in New York and 4-3/4-low in London.
New York lost 530 points from the prior week. Similarly, the ICE Robusta’s main contract for January delivery ended the week at $4,678, or 3.7% less than on Friday 4th October.
Data and maps from the Brazilian National Institute of Meteorology (Inmet) show rainfall totals of 15mm in much of Minas Gerais (the main Arabica-producing state) and 20mm in Espírito Santo (the main Robusta-producing state) in the five days from Monday to last Friday.
The rain continued over the weekend. As already written, the first spring rains are essential to trigger the main flowering of the trees, which then need further regular rainfall in good quantities for fruit setting and ripening.
Even if the rainfall regime in the coming months is adequate, it will not be possible to recover the part of the crop potential that has already been lost due to over four months of drought.
Meanwhile, we are approaching the start of the harvest season in Vietnam, which typically begins at the turn of October and November.
Despite improved weather conditions following the severe drought earlier in the year, the 2024/25 crop is expected to be even smaller than last year’s, which was already the lowest in four years.
Anyway, the arrival of the new crop in the market, which will begin in the final weeks of the year, is set to alleviate the supply tightness on the Robusta front easing market tensions a bit.
Meanwhile, some areas of Colombia and Central America are entering the main harvest period, which will improve the availability of washed Arabicas in the coming months.
While the postponement of the application of the EUDR is taken for granted – even though the measure still needs the green light from the Council and the European Parliament – there are already those who complain that the postponement will harm the companies who had already taken steps to comply.
The EU’s vegoil and oilmeal group Fediol said its members – which include trading giants such as Cargill and food processors like AAK – will suffer losses from a delay after paying premiums to secure raw materials that comply with the law.
“It’s a financial loss they are making by having been ready on time,” Fediol director general Nathalie Lecocq told Reuters.
The same applies to all the other sectors affected by the regulation. For example, a research published last month by Fefac, an EU animal feed industry body, estimates that EUDR compliant soybeans would cost 5-10% above regular beans.
