MILAN — Coffee futures retreated into negative territory following two positive sessions at the turn of the week. Yesterday, Tuesday 29th October, declines were seen in both markets, although more pronounced on this side of the pond. In London, the main contract for January delivery of the Ice Robusta lost 2.3% (-$104) to settle at $4,398. In New York, the contract for December delivery fell 425 points (-1.68 per cent) to close the second session of the week at 248.10 cents.
Meanwhile, both exchanges saw the speculative sectors decrease their net long positions in the week to 22nd October.
Yesterday’s decline in coffee futures prices followed two sessions in positive territory, driven by technical factors but also by the continued uncertainty on the fundamental front.
Ice Robusta had fallen to $4,337 on Thursday the 24th, the lowest level for the main contract since mid-August. The rebound over the following two days was also due to weather news from Vietnam.
Bloomberg reported that Tropical Storm Trami had brought heavy rains to parts of the central highlands, just as the harvest season is about to get into full swing.
As for Vietnam’s production this year, all estimates seem to agree that it will be even lower than last year’s already disappointing output.
Despite declining volumes, Vietnam’s exports achieved record earnings of close to $5.5 billion in the 2023/24 (October-September) coffee year.
In Brazil, the rains helped the main flowering, but the potential for the next harvest appears to be significantly reduced due to the prolonged drought during the winter months.
Furthermore, weather data from Somar Meteorology quoted by Barchart indicate that Minas Gerais, Brazil’s top Arabica producing state, received only 25.1 mm of rain last week: just 74% of the historical average.
At the Ice Arabica, the main contract fell to 245.45 cents on 24 October, its lowest level in two and a half weeks.
Between Friday and Monday, however, it rebounded to 252.35 cents before yesterday’s decline.
Uncertainty over the upcoming harvest season in Brazil is likely to have a major impact on market volatility in the coming months.
However, we will have to wait a few more months for the first reliable estimates of the potential of the next crop.
The surge in green coffee prices on international markets has pushed up US retail prices.
Per-pound ground coffee prices rose nearly 21% in the last year, and ground decaffeinated coffee prices grew 17% per unit, according to Circana data from April.
Whole coffee bean, instant coffee and instant decaffeinated coffee prices also jumped by double digits over the same period, increasing 16%, 13% and 12%, respectively.
The coffee concentrate market was the only segment to avoid considerable price increases at a 6% uptick.
