MILAN – Coffee futures markets closed mixed yesterday, on weather news and updated estimates. In London, the contract for November delivery of the Ice Robusta closed up a further $31 to a new high of $5,334. Ice Arabica’s main (December) contract lost 10 points to settle at 264.40 cents.
The bearish pressure in New York was partly due to a new report by Rabobank, which forecasts a 2.2% increase in world production 25 to 174 million bags in coffee year 2024/resulting in a slight surplus of just 1.3 million bags, made possible by a higher Arabica crop.
The prospect of a modest surplus, however, will not be enough to bring prices down.
“We maintain a neutral outlook for most of the remainder of 2024 due to the EU deforestation regulation (EUDR), port congestion, scarcity of containers, and the Red Sea crisis,” the Dutch multinational banking and financial services company points out in a note.
The EU “seems to be acting as a vacuum cleaner, absorbing a few million extra bags of coffee to beat the EUDR implementation deadline at the end of December 2024”, Rabobank also said although the bullish impact of the new rules could reverse next year.
For this reason, it seems difficult for the futures markets to turn bearish at the moment. “This is not just due to the EUDR, but also because there are about “3 million bags stuck in longer journey times, and a couple of million more waiting for containers.”
As for Brazil’s 2025/26 season, the potential of the Arabica crop is ‘hanging by a thread’, said Rabobank analyst Carlos Mera in an interview with Bloomberg.
Conab will release today its third official estimate of Brazilian production for crop year 2024/25. All details in tomorrow’s edition of Comunicaffe International.
