MILAN – Coffee futures prices experienced a slight downward correction yesterday, Monday 16 September, after hitting new all-time highs during trading. The Ice Robusta made strong new gains early in the day, with the main contract for November delivery reaching an intra-day high of $5,486, a new record for the 10-T contract. However, subsequent profit-taking saw prices fall below Friday’s levels and the session closed down $21 at $5,246.
It was a similar story in New York, where the December contract hit a new intraday high of 271.80 cents, only to fall back into negative territory and settle at 258.55 cents, 90 points below Friday’s close.
Yesterday’s partial profit taking did not change the overall picture, which is still dominated by weather woes, particularly in the world’s two largest coffee producing countries.
In Brazil, weather models are pointing to scattered rains for the rest of the month, which “won’t do the trick” said dealers quoted by Reuters. As for October rains, they said there is a lot more uncertainty over if they will suffice.
The drought that has been affecting Brazil for more than four months has led to a water deficit in the soil and severe vegetative stress in the trees aggravated by the lack of irrigation in a majority of southeast Arabica coffee farming districts.
“The potential of the 2025/26 Arabica crop is hanging by a thread,” said Rabobank analyst Carlos Mera, per Bloomberg.
“This problem comes at a time when the coffee industry is suffering from port congestion in several countries, global scarcity of containers, disruptions around the Red Sea, and also disappointing crops in Vietnam.”
In Vietnam, the main coffee districts in the Central Highlands have mostly escaped the impact of the Typhoon Yagi and should not be seriously affected.
However, local traders warn that the rainfall might have caused coffee berries to drop, hurting the quality, and disrupting drying operations, according to Reuters.
Vietnam could see wetter-than-normal weather in the next few months as the La Niña weather pattern is expected to develop.
The harvest season spans from November through January in Dak Lak, Dak Nong, and Lam Dong provinces.
The latest Commitment of Traders report from the Ice Arabica coffee futures market has seen the Non-Commercial speculative sector decrease their net long position by a mere 17 lots over the week of trade leading up to Tuesday 10th September to register a net long position of 39,084 lots on the day.
The longer-term Index Fund sector of the market have reduced their net long position by 1,078 lots over the same time, a net long position of 52,090 lots.
In London, the Robusta coffee market has seen the speculative Managed Money sector increase their net long position by 73 lots over the week of trade leading to Tuesday 10th September 2024: to register a new net long position of 35,106 lots.
