MILAN – Coffee futures prices rallied further on Tuesday on concern that excessive dryness in Brazil could reduce coffee yields affecting global coffee supplies. The most active contract for December delivery rose 3.2% closing at 228.25 cents per lb, the highest level for the benchmark price since the beginning of July. London’s September Robusta futures prices closed up $17 at $2,254 reflecting projected decline in Vietnam’s coffee production in 2022-2033.
The Arabica market was supported by concerns about the crop outlook in Brazil with heavy rains earlier this month triggering early flowering in some areas but subsequent dry weather raising the prospect that there could be insufficient moisture to sustain the development of coffee buds and cherries.
Meanwhile, Colombia is struggling to recover from crop-damaging rains, while Honduras, Guatemala and Nicaragua are running out of supplies from the 2021-22 harvest. Costa Rica’s next-season crop is showing signs of stress, and a drought has cut robusta yields in Uganda.
Bean availability in Vietnam has fallen as shipments rose 17% to 1.13 million tons in January-July from a year earlier, according to customs data.
Stockpiles will halve by the end of September from a year earlier, according to the median estimate in a Bloomberg survey of traders. Carryover stockpiles are seen at 200,000 tons at the start of the new season on Oct. 1, compared with an estimated 400,000 tons a year earlier, according to the survey.
Output may fall 6% to 1.72 million tons (28.7 million bags) in 2022-23, the survey also showed. The Robusta variety accounts for about 90% of Vietnam’s coffee output.
The slump in Vietnamese inventories pushed domestic robusta prices in Dak Lak province, which accounts for about one-third of the country’s harvest, to a record high of 49,100 dong ($2.10) a kilogram last week.
Papua New Guinea establishes a minister for coffee
In other news, the Papua New Guinean prime minister has announced his cabinet, which contains not only some new faces, but some new positions as well, including a minister for coffee.
The post shows the government’s commitment to expanding key agriculture industries, said the prime minister James Marape, who won re-election earlier this month. For the first time Marape also named a minister for palm oil.
“The appointments specifically spotlight agriculture in a very significant way, to see agriculture growth in the country,” he said on Tuesday when announcing the new 33-member cabinet.
