December Arabica coffee closed the weekend session up 2.95 cents/pound and January 25 Robusta coffee closed up $74 at $4,411/ton.
Coffee prices traded on Friday increased compared to the beginning of the session to close at a high level due to compensating buy and sell orders. However, if calculated on a weekly basis, the price of Robusta coffee has marked a consecutive decline over the past 4 weeks when comparing this week’s closing price of $4,411 compared to last week’s $4,615, calculated on the basis of January prices. /25. Meanwhile, Arabica coffee prices calculated based on December/24th prices this week also decreased compared to last week, closing the week at 248.4 cents compared to 257.3 cents/pound.
Technically, on a weekly time frame, both markets are expected to fall further if no special fundamental information is released next week.
Ongoing short rains and contributing to the lack of moisture stress in Brazil are believed to be responsible for the drop in coffee prices. The Somar Meteorologia meteorological agency reported on Monday that Brazil’s Minas Gerais region received 36.8 mm of rain last week, or 115% of the historical average. Additionally, meteorologist Climatempo also said on Monday that more significant rains are expected in Minas Gerais from Friday onwards, which should help moderate temperatures and improve temperatures. soil moisture.
Fundamentally, coffee prices remain supported by concerns about long-term damage to the crop due to drought since April. Rainfall in Brazil has been consistently below average since April. 4, causing damage to coffee plants during the pre-flowering stage and reducing prospects for Brazil’s 2025/26 Arabica coffee crop.
The tropical storm with the Vietnamese name Tra Mi is creating winds in the opposite direction and moving towards central Vietnam after passing through the Philippines and approaching China’s Hainan Island near the Gulf of Tonkin area and is likely to The energy will go back south and make landfall in the Da Nang area this weekend. The storm could cause heavy rain throughout Vietnam’s robusta coffee production areas, especially in the northern Central Highlands. It is still too early to predict the impact on coffee growing areas, but heavy rain is forecast to cause fruit loss and disrupt ongoing harvesting activities.
The amount of certified graded Arabica coffee held on the New York exchange was said to be unchanged at the end of Thursday with inventories remaining at 839,910 bags, so arabica stocks were available. increased from 795,874 bags compared to about 20 days ago.
Below is some information about the coffee production situation in Colombia
While the harvest of the main coffee crop in Colombia is still progressing, there are the first records of the blooming of the crop commonly known as Mitaca, which is the name of another harvest that usually takes place from May to May. August in this country. It may seem strange to talk about harvesting and blooming at the same time, but this is due to the climatic conditions in Colombia, where coffee is produced year-round. In the south of the country, the harvest takes place in the first half of the year. In the central range, the harvest is spread over both halves of the year. In the northernmost plantations, the harvest takes place in the second half of the year.
Coffee production in Colombia increased in 2024, after poor harvests in the previous three years, which were believed to be affected by a prolonged La Niña period. Low light levels, due to the frequency of cloudy days (which weaken photosynthesis), have reduced the production potential of crops. These factors have kept Colombia’s output from exceeding the 12 million bags harvested in recent years.
The emergence of El Niño late last year created a more favorable climate for the country. Reducing fertilizer costs and high coffee prices on the world market have promoted crop care, which has fueled improvements in yields. Production from September 2023 to August 2024 reached 12.53 million bags, an increase of 18% compared to the previous season, when the total production was only 10.60 million bags. This information comes from the National Coffee Growing Federation of Colombia (FNC), which has forecast Colombian production to reach 13 million bags by 2024.
In June 2024, there was a forecast by the US Department of Agriculture that Colombian production would reach about 12.40 million bags for the 24/25 crop, but more favorable weather and greater investment have brought prospects. More optimistically, the country’s output could reach 14.10 million bags.
December 24 prices lost support at 250 cents, which added negative technical weight to Arabica coffee in the US ICE market.
Overall, both New York and London are looking ahead to 2025, especially with signs of Brazil’s next crop in sight. The blooms have helped ease pessimism about yields, which explains the decline over the past four weeks. The uproar over the contract expiring in December in New York, are also issues that need to be raised recently. It is worth noting that the December/24 options contracts will expire on November 8.
Weather reports in Brazil continue to be positive across most coffee growing areas and the rainfall received has provided much-needed moisture after the dry winter months. Weather forecasters predict more rain next week, which will be warmly welcomed by Farmers because moisture is needed for coffee plants to flower for Brazil’s next 2025/26 crop.
The NY/London price gap has widened, as arabica has increased in price relative to robusta. The explanation is said to be that the weakness of robusta before the new harvest from Vietnam has caused the price on the London market to fall below 5,000 USD/ton.
Kinh Vu (giacaphe.com)
