MILAN – Coffee futures prices jumped to new highs yesterday on chain supply problems, international tensions and extremely low inventories in both markets. In London, the main contract for March delivery surged to a new peak of $3,220, up $92 from Friday. It is the highest since Jan 2008, when the current form of the contract first started trading.
Continued attacks by Iran-aligned Houthis in the Red Sea are boosting prices by slowing down shipments of Robusta coffee from Asia to Europe, while farmers in Vietnam remain reluctant to sell.
This situation has prompted some of the world’s main Robusta coffee buyers to reduce bean purchases from Vietnam and secure more supplies from Brazil.
According to the latest COT, ICE Robusta coffee speculators raised their net long position by 9,486 lots to 43,722 lots, as of January 16.
In New York, Arabica futures prices for March delivery rose to a 3-month high of 187.55, up 570 points from the previous session.
Dry conditions in Brazil are boosting Arabica coffee prices. In its first official forecast for the 2024/25 coffee season, Brazil’s National Supply Company (CONAB) estimated the country’s production at 58.1 million bags, up 5.5% on year, but far below a record high of 63 million bags set in 2020.
In Brazil, the sales flow remains very slow, given the grower’s resistance and the buyer’s lack of aggressiveness, reports Safras & Mercado.
The SAFRAS survey showed a commitment on the part of growers of 74% of Brazil’s 2023 crop until January 16.
Overall sales increased by 5% compared to last month. Sales are slightly below the same period last year, when they reached 75% of production, and below the 5-year average, which is around 76% for this period of the year.
Sales of Arabica coffee reached 69% of production, below the 72% in the same period last year and the 5-year average (74%).
The combination of a larger crop and a lower percentage of sales this year ends up increasing stocks held by growers of Brazil’s 2023 crop, stocks that are greater than in the same period last year, says S&M.
Conillon sales reached 83% of production, a percentage higher than in the same period last year, when the commitment was at 80%, as well as also above the five-year average (81%).
