According to Fitch Solutions Inc. Futures prices of Arabica coffee are likely to increase further thanks to the drop in Brazil’s crop this year.
Coffee bean warehouse in New York port.
The analyst team raised its forecast for a shortage of 4.3 million bags to 6.8 million bags for coffee year 2020/2021, “The biggest shortage since 2009/2010 crop year”, In part due to “bad weather” reduced production prospects for Brazil, the leading producer of Arabica.
The drought caused by La Nina and higher than normal temperatures during the flowering period last September exacerbated the cyclical drop in yields. “Every two years”Fitch emphasized.
There are some signs of improvement, with minimum rainfall expected in major Arabica-producing states over the next few weeks.
“Keep prices high”
Brazil’s harvest this year fell, Fitch pegged at 48.50 million including Conilon Robusta, down 714,000 bags from January estimate, which means “Keep the price high”.
“The price will be slightly higher than the spot price and will remain high in the coming months after breaking through the resistance around 140 cents / lb in April, while the momentum and sentiment indicators are both bullish. . “
However, Fitch raised its forecast for the 2021 average New York Arabica coffee price by 20 cents / lb, on a second contract basis, estimated at 135 cents / lb, this proposed price would decline at the end of the year.
New York July contract on Monday stood at 151.80 cents / lb and futures are expected to rise above 160 cents / lb in about a year.
“The prices will fall since September when the new coffee harvest in Central America, Vietnam and Colombia begins,” Fitch said, and the potential for a well-seasoned 2022 crop in Brazil also becomes prominent.
Fitch’s forecast for the end of 2021 price decline corresponds to that of Rabobank. The Dutch Bank said two weeks ago that “we still expect Brazil’s Arabica output to grow well in coffee year 2022/2023”.
Next to cycle “Every two years”, the bank insists “cut” by the grower, and the yield achieved this year boosts prospects for 2022, “And many new planting areas begin to yield.”
Normal weather in September can cause the market to drop significantly.
Mai Vy (according to the Agrymoney)
