MILAN – Robusta coffee futures in London soared yesterday to a new 15-year high on strong demand and supply concerns. The main contract for July delivery close $41 up at $2,629, the highest price on record since March 2008. In New York, the July contract of the ICE Arabica lost 280 points to end the day at 189.20 cents per lb, down from a recent high of 192 on Friday.
Inflation and the economic crisis are pushing the consumption of cheaper Robusta-based blends increasing the demand for the cheaper variety.
Dealers said there appeared to be very limited supplies left in top Robusta producer Vietnam, which had its smallest harvest in four years this year, and the market was awaiting a pick-up in shipments from Brazil.
However, it should also be noted that Conab’s latest forecast, issued on Thursday, has cut estimates for Robusta production in the upcoming coffee season due to last year’s drought in Espirito Santo, the country’s biggest producer of this variety.
To make things worse, USDA’s latest gain report sees an 18% drop in Indonesia’s coffee production in 2023/24 (April-March).
Robusta production is expected to fall to a record low of 8.4 million, a 20% decline from the previous year as excessive rainfall disrupted the cherry development stage, lowering yield in major Robusta producing areas.
Meanwhile, shipments from Uganda, Africa’s largest coffee exporter, declined 8% by volume in April compared with the same period last year, hurt by a drought and falling shipments to Sudan due to the conflict there, the sector regulator said.
“There has been such a shift in demand away from the more expensive coffee that even the market is not covered by the largest robusta exports,” Judith Ganes, head of a New York-based consulting firm that focuses on commodities such as coffee, told Bloomberg.
On a positive note, USDA predicted Colombia’s 2023/24 coffee production will climb 2% to 11.6 million bags.
