MILAN – Arabica coffee futures for July delivery jumped 5.3% on Tuesday marking the biggest advance in a week.
The session was highly volatile, reflecting uncertainty over the extent of crop damage from drought in Brazil. The benchmark contract traded in a range between 194.40 and 212.55 closing at 211.90 cents per lb.
Prices dropped during the morning hours, but rebounded in later trade following news of cold weather entering Brazil’s producing regions.
Technically coffee is back in the 210 – 220 range and may test the 220 tomorrow if the momentum of today’s session follows through the tomorrow’s opening.
“Despite the recent downward movement, we are still of the opinion that Arabica coffee prices are still moving in an uptrend,” Vanessa Tan, an analyst at Phillip Futures, said in a note.
In other news, Vietnam said it plans to uproot as many as 95 million old coffee trees in the first systematic replanting program to renews plantations countrywide.
“We are planning to undergo a long-term process of replacing old coffee trees, and this, together with the current dry weather conditions, will hurt coffee output,” Nguyen Viet Vinh, general secretary of the Vietnam Coffee-Cocoa Association (VICOFA), told The Wall Street Journal.
According to VICOFA, Vietnam’s output reached this year 1.3 million metric tons. The estimate is well below ICO’s figures of 27.5 million bags.
The Association said the 13.8% of Vietnam’s 622,000 hectares of coffee trees are older than 20 years and a further 22.5% are between 15 and 20 years old.
