MILAN – Coffee futures prices fell sharply in the last decade of June. In New York, the main contract for September delivery was 15% down from a month peak of 182.95 cents per lb to end the month at 5-month low of $159 cents. In London, the September Robusta contract closed down $79 to a one-and-half-month low of $2,491, from a 15-year-high of $2,783 reached on June 19th.
Favourable weather in Brazil is speeding up the harvesting process in the main Arabica regions. Ice Arabica certified stocks levels are still very low totalling 544,915 bags last Friday, slightly up from a 7-month low of 541,139 bags on Wednesday.
On the Robusta side, coffee trading in Vietnam remained sluggish last week due to the continuing scarce availability of coffee beans in the market. In Indonesia activities were muted due to a holiday.
According to the Uganda Coffee Development Authority, or UCDA, the country’s coffee exports for the month of May were 1,707 bags or 0.38% lower than the same month last year, at a total of 453,169 bags.
Robusta exports saw a 6.25% decrease, to total 328,151 bags, while Arabica exports registered a 19.23% increase when compared to the same month last year to total 125,018 bags exported in May 2023.
The UCDA also reported that the cumulative exports for the first eight months of the current October 2022 to September 2023 coffee year were 132,584 bags or 3.54% lower than the same period in the previous year, at a total of 3,608,475 bags.
The research arm of bank Citi has advised investors on Thursday to explore a long-short trade with coffee futures at the Intercontinental Exchange (ICE) that includes buying Arabica coffee and selling Robusta coffee, reports Reuters.
Citi commodities analysts see an opportunity for gains in a strategy of buying the December 2023 Arabica contract and selling the January 2024 Robusta position, setting December 19 as the maturity date for this trade.
The bank said in a note that the spread between Arabica and Robusta coffee prices have been falling steadily.
“Currently at $0.35/lb, and very close to a significant historical support of around $0.22-$0.25/lb, this could represent a good entry point opportunity,” said the bank, noting that the spread had hit a record high of $1.55 in February 2022.
