MILAN – Coffee futures rebounded at the start of the week, with New York and London both well into positive territory. The contract for September delivery of the Ice Arabica gained 485 points (+2%) to close at 243.05 cents, after three consecutive sessions in the red. September ICE Robusta coffee futures rose for the second consecutive session, gaining $51 to settle at $4581, its highest level since two Mondays ago.
Both exchanges were supported by tight supply and uncertainties in the market.
“The global S&D (supply and demand) situation is tight, and this time Brazil can not come to the rescue,” said a broker at an international trading house quoted by Reuters citing reports of smaller-than-expected crop in the world’s top grower.
Harvesting in Brazil is proceeding apace, but is showing a somewhat disappointing crop compared to initial expectations.
In its new estimate, the respected agricultural analyst Safras & Mercato now expects a 2024/25 production of 66.04 million bags, of which 45.3 million bags of Arabica and 20.7 million bags of Robusta, far below a preliminary estimate of more than 70 million bags made earlier this year.
Rabobank also cut its new crop estimate by almost 3.9% to 67.1 million, of which 44.1 million Arabica and 18.9 million Robusta.
Meanwhile, Somar Meteorologia reports that Brazil’s main Arabica region of Minas Gerais received no rain last week, versus the historical average of 2.6 mm.
The reduced availability directly impacts Brazil’s trade flow, resulting in a smaller exportable balance, with shipments expected to fall to 44 million bags, down 7% from the previous season, reports Safras & Mercado.
Green coffee shipments are expected to reach 40 million bags, well below the 43 million bags shipped in the 23/24 season.
Despite the reduction in exports, stocks are expected to fall again, squeezing the stock-consumption ratio to only 15%. This more restrictive supply scenario justifies an increase in the market balance price, concludes the analyst.
