MILAN – ICE Arabica coffee futures rose sharply on Tuesday reaching their highest levels over the last two months. The main contract for March delivery posted a 730 (+3%) increase to close at 248.95 cents per lb, close to the historic highs reached in December.
The ICE Robusta coffee futures contract for March delivery inched $13 higher to a 3 and ½ week high of $2,246 deriving support from the rally in Arabica prices.
ICE-monitored Arabica coffee inventories fell to a 22-year low of 1,060,242 bags on Tuesday. ICE-monitored Robusta coffee inventories fell to a 3-1/4 year low of 9,212 lots on Monday.
Coffee reserves certified by the ICE have been falling since September due to soaring shipping costs and unfavourable weather that clipped production in Brazil, the world’s largest grower and exporter.
Gains accelerated after the International Coffee Organization (ICO) cut its 2020/21 global coffee surplus estimate to 1.20 mln bags from a January estimate of 2.41 mln bags.
“The narrative is still declining stocks and doubt about how many years deficit we are confronting. With COVID moving into the endemic phase and palpable demand building, it’s really hard to believe that we have seen the highs,” Cardiff Coffee Trading said in a market update quoted by Reuters.
Traders are planning to deliver thousands of tonnes of robusta coffee from Asia to the ICE exchange in Europe for the first time in more than three years – a move likely to take the heat out of benchmark prices that are near 10-year peaks, says Reuters in a report.
