MILAN – Coffee futures reversed early losses on Wednesday to close the day with moderate gains on both sides of the Atlantic. With no fresh news from fundamentals, the sector continues to monitor the weather situation in Brazil and Vietnam. ICE Robusta rebounded from Tuesday’s six-week lows on market consolidation, after five consecutive sessions on the negative side.
The main contract for July delivery settled at $3,414, or $36 higher than the previous day.
According to analysts, dry conditions in Vietnam remained a major concern despite recent rains in some areas.
In New York, July Arabica coffee futures extended gains from the previous session and closed 90 points up at 197.55 cents.
Forecasts for limited rainfall in Brazil until late next week triggered some short covering.
Also in Brazil, harvesting operations are in full swing and ahead of schedule in most production areas. In Rondônia, almost 30 per cent of the area has already been harvested in the Robusta Amazonian areas, according to local sources.
The coffee trade might have been “contaminated” by a wave of speculative buyers betting prices would rise after the troubles in cocoa, said Carlos Costa, head of sales for Hedgepoint Global Markets LLC in an interview with Bloomberg.
The cocoa rally has had a “psychological effect” on coffee, spurring comparisons between the commodities, added Andre Acosta, a director at financial firm Marex Group Plc. Both cocoa and robusta futures may have drawn “significant margin calls” as they rose, forcing traders to lift hedges or trade options to protect their positions.
Margins for companies sourcing both commodities might be “hurting,” he added.
Ethiopia earned $835 million in revenue from coffee export in nine months. Africa’s largest coffee producer exported 174,596 tons of coffee during the first nine months of the current Ethiopian 2023/24 fiscal year that started on July 8, the Ethiopian Coffee and Tea Authority (ECTA) said in a statement.
During the previous 2022/23 fiscal year, the country earned $1.3 billion in revenue from the export of around 240,000 tons of coffee.
