Arabica coffee prices trade at over 280 cents a pound, hovering around the highest level since mid-2011, the highest in 13 years amid concerns about the future of supply.
Traders have been assessing the consequences of a one-year delay to European Union anti-deforestation legislation, which could limit coffee supplies from countries such as Brazil and Indonesia, where deforestation.
However, the focus is still on the weather problem that is detrimental to next year’s crop in the world’s leading producer, Brazil. Traders note that despite recent rains, soil moisture remains low, leading to limited fruit growth and excessive leaf growth.
Forecasts of continued hot and dry conditions in Minas Gerais, Brazil’s main Arabica coffee producing region, have returned to further support prices.
Reviewing the past week, first is the increase in Arabica coffee prices, reaching nearly the highest level in 3 weeks on the first day of Monday, November 11, 2024. When the Arabica market reached the highest level of 258.7 cents/pound this day, the Robusta market also started to increase rapidly when the trading price reached the highest level of the session at 4490$/ton, the main reason. causing prices to increase in both markets during five consecutive sessions last week is said to be because traders assess the supply outlook for 2025 will be even worse.
At the end of the week, Arabica coffee price in December was at 281.80 cents/pound and Robusta coffee was at $4,773/ton. Technically, Robusta coffee prices are considered to be just starting to increase.
While forecasts of much-needed rain in Brazil’s South-Central region have alleviated some concerns about drought, uncertainty remains regarding the long-term impact of the severe drought. The recent recession in Brazil has implications for future crops.
According to the latest data, Brazil exported 4.57 million bags of green coffee beans in October, reaching the highest level of any month so far in 2024.
The impetus to push Arabica prices to a 13-year high and Robusta to a one-month high on Thursday came in part from the European Parliament after it voted to change its regulations. deforest. If the EU cannot agree on changes to the regulations before next month’s deadline, the law will be implemented, which could limit coffee supplies from countries such as Brazil and Indonesia, where deforestation occurs. The EU Deforestation Regulation measure, known as EUDR, states that coffee importing companies must ensure that the products they bring into the EU are not produced in deforested areas after 2020.
In Brazil’s latest independent crop forecast update, commodity brokerage and consulting firm StoneX released their preliminary forecast for Brazil’s coffee production, which they say is is likely to reach about 65.60 million bags in the 2025/2026 crop year, which is about 10% lower than the current 2024/25 coffee crop.
The crop forecast clearly states that the reason they forecast a decrease is due to drought in the Arabica growing area (Minas Gerais). These weather conditions are factors that are likely to impact the potential of the 2025/26 crop that is taking shape, however this is only the early stages of fruit development.
For the output coming from the Robusta/Conilon areas, it will be considered good news. When this commodity begins to be harvested in April, there will be encouraging yields because Robusta is not located in an area affected by drought. Additionally, growing domestic and export demand for Robusta coffee has spurred further investment from farmers, including renovation and expansion, new varieties as well as irrigation infrastructure. necessary. The forecast is one of the first estimates for the Brazilian crop from July 2025 to June 2026 to be publicly released.
Through this we can see that the Robusta/Conilon coffee region is recovering and growing. New harvests from Vietnam are currently being harvested and this product will reach the market in the first half of 2025, while new Robusta harvests from Indonesia, Brazil and Uganda will have to wait until the second half of 2025. .
The amount of certified Arabica coffee held on the New York exchange increased by 7,427 bags last Thursday, reaching 873,589 bags.
Kinh Vu (giacaphe.com)
