Flashes
9700 views November 7, 2016 posted by Maja Wallengren

MARKET INSIGHT: Dec Arabica Coffee Continues Stunning RALLY, Dec Prices Up 4.75 Cents At $1.7475

  Share...

NOV 7–What is turning out to be a FASCINATING rally in Arabica coffee prices at the ICE futures exchange in New York continued from early on Monday with active December prices up an impressive 4.75 cents per pound in fresh near 21-month highs at 174.75 c/lb. More forward March coffee was 4.85 cents higher at 178.40/lb. (10:06 a.m. EDT)

NOV 4, 2016–Arabica coffee futures closed the week with another intense rally in an impressive performance that took total gains from the last session to almost 10 cents. A combination of supply concerns among roasters in the U.S. market –which is at its PEAK buying season ahead of the key winter consumption period– combined with a series of technicalities finally drove prices through resistance to break the $1.70 per pound barrier. Active active December futures settling up 5.70 cents at 171.35 c/lb. The market opened a tad lower as bulls and bears continued their battle over pricing positions, but the bear camp was quickly able to push prices higher and trading stayed in an upbeat mood the rest of the session, rising 6.35 cents to an intra-day high of $1.72/lb an hour before settlement at the ICE exchange in New York. More forward March coffee closed 5.70 cents higher at 174.90/lb.

11:14a.m.EDT–UPDATE: Active Dec Arabica coffee prices NOW up 6.35 cents to new intra-day high at $1.7200/lb, more forward March coffee SURGE a full 6.30 cents to $1.7550/lb. Traders said that while the pressure on U.S. roasters buying up for the key winter consumption period ahead, technicalities such as heavy fund buying and a high open interest were a large part of the big rally that in the last two sessions have seen Dec Arabica prices rise a full 9.10 cents. (MORE)

NOV 4, 2016 (9:45a.m.EDT)–Arabica prices continued to RALLY in frantic trade Friday which by mid-morning already had led to a trading volume of over 36,000 positions and the active December prices reaching a near 21-month high, up an impressive 4.75 cents per pound at $1.7040 c/lb on fresh supply fears. More forward Mar coffee was up 4.70 cents at $1.7390 /lb as bears in the market succeeded in BREAKING the barrier of resistance to move passed $1.70 which traders actively have pursued for most of the past month, as bulls and bears have been locked into heated competition about current pricing positions for Arabica coffee as the MAIN buying season for the roasters in the U.S. market ahead of the key winter consumption period is at its peak and concerns over mounting supply problems at the sources of origin have risen at a time when global stocks continue to dwindle.

OCT 28, 2016–Active December Arabica prices closed the week on a higher note, keeping most of the gains from what trades described as “an impressive rally” driven by underlying supply problems in the market. Trade was brisk with close to 40,000 positions for the two front months switching hands every day, bears and bulls continued to battle for pricing positions at the ICE futures exchange in New York. Active December futures settled 0.70 cent per pound higher at $1.6550/lb on Friday, while the more forward March contract closed up 0.65 cent at $1.6895/lb. Sellers in Origin were present throughout the session, actively taking profits of the last week’s gains that have seen prices rise to fresh 20-month highs.

OCT 27, 2016–Active December Arabica prices continued to RALLY on Thursday as bears and bulls continued to push for the lead on pricing positions at the ICE futures exchange in New York. Active December futures rose 1.10 cents per pound to settle at $1.6480/lb while the more forward March contract closed 1.10 cents higher at $1.6830/lb. Sellers in Origin were present throughout the session, actively taking profits of the last week’s gains that have seen prices rise to fresh 20-month highs, physicals traders on the floor at the ICE exchange told SpillingTheBeans by telephone from New York.

OCT 26, 2016–Active December Arabica prices continued to RALLY in early trade Wednesday at the ICE futures exchange in New York, rising 1.25 cents per pound to fresh 20-month highs of $1.6575/lb on reports of slowing exports from the world’s biggest grower Brazil which is producing a lower than expected harvest in the current 2017-18 cycle. The more forward March Arabica contract was up 1.20 cents per pound to $1.6910/lb, the highest level since February 2015, but resistance set in when the market tried to push above $1.70 c/lb. Profit-taking is expected to set in within either this or coming sessions as bulls and bears competed for price positions, physicals traders on the floor at the ICE exchange told SpillingTheBeans by telephone from New York. (10:30a.m. EDT)

January Robusta coffee prices at the LIFFE exchange in London, meanwhile, on Tuesday rose to fresh 2-year highs at $2,175 per metric ton, pressured by drought-damaged crops as growers in both in top producers Vietnam and Brazil’s state of Espirito Santo are facing one of the smallest crops in years. Market analysts, however, point out that even though the price is the highest in two years it still falls sharply below that of prices for cocoa at $2,732 per tonne, making it unlikely for Vietnamese producers to make coffee their first choice of crop. (12:20p.m. EDT)

*December Arabica prices settled 0.80 cent per pound down at $1.6370/lb at the ICE on Wednesday after profit-taking set in during a session marked by brisk activity and a trading volume of over 52,000 contracts for the two front months. The more forward March contract settled 0.70 cent lower at $1.6720/lb. (2:05p.m. EDT)

Current Arabica futures, however, have strengthened an impressive 38 percent since Apr. 7th where active prices settled at $1.1980/lb. This is in line with SpillingTheBeans’ forecast for prices to slowly but gradually rise as more evidence of the lower than expected harvest in top grower Brazil and most of the world’s other biggest producing countries starts reaching the market.

Coffee Beans 20

OCT 24, 2016–Active December Arabica prices RALLIED at the ICE futures exchange in New York on Monday, surging an impressive 6.60 cents per pound to fresh 20-month highs of $1.6450/lb on reports of slowing exports from the world’s biggest producer Brazil, where supplies from the new 2016-17 harvest has been damaged by drought, excessive rains and frost, resulting in disappointing volumes below market expectations.

The surge in prices is in line with predictions by SpillingTheBeans’ author and independent analyst Maja Wallengren who for months has insisted the harvest will not come in as high as expected due to the multiple negative effects of weather problems. SpillingTheBeans has repeatedly stressed the market is not expected to react until the evidence of lower supply is emerging more clearly, such as seen in slowing exports.

The more forward March Arabica contract similarly rallied, rising 6.50 cents per pound to $1.6790/lb, the highest level since February 2015.
***
JUL 18–Active September Arabica prices RALLIED at the ICE futures exchange in New York on Monday, surging nearly 5 cents per pound on reports of damaging frost in regions across the world’s largest grower Brazil. Prices opened lower across the board with active September Arabica prices falling to as low as $1.4485/lb and the more forward December contract trading as low as $1.4780/lb before news of the widespread frost attack sent jitters through the market. Once evidence started to hit the market in both reports with comments from growers, backed by agronomists, in addition to a rapid flow of pictures from multiple regions showing coffee clearly damaged traders went into buy mood. Prices rose nearly 5 cents before active September prices settled up 1.90 cents at $1.4945/lb as damaging frost continued to be confirmed through out the day in arabica growing areas accounting for over 80 percent of Brazil’s entire new Arabica harvest. Prices moved close to recent 18-month highs and more forward December coffee closed up 1.90 cents at $1.5240 after reaching an intra-day high of $1.5275/lb as warnings of more damaging frosts in Brazil were issued for Tuesday.

The fact that prices ended up near 2 cents were all the more powerful considering the big dips in early session, said traders. “Gains of nearly 2 cents was powerful given the early bearish sentiment that was lingering following Friday’s performance,” one US trader told Reuters.

See the full details and multiple reports of evidence and pictures of the frost damage here:
http://spilling-the-beans.net/market-insight-intense-coffee-frost-alert-to-prevail-over-brazils-southern-minas-through-june-16th/

JUL 14–Active September Arabica prices continued to rally on Thursday at the ICE futures exchange in New York, settling up 4.50 cents per pound at $1.5215/lb after reaching a session high of $1.5280, and closing at 18-month highs. More forward December coffee closed up 4.55 cents at $1.5510/lb on Thursday, buoyed by the strengthening of the local currency the Real in the world’s biggest producer Brazil which made growers hold back on sales and tightened offers. Prices opened up and stayed in higher territory throughout the day as traders attributed the rise to limited origin offers in both Brazil, and so a smaller extend also in the world’s Nr 2 producer Vietnam. Prices have risen a full 14 cents per pound in the last two weeks and are currently at the highest levels since January 2015, when Arabica coffee last experienced a major rally on massive problems in Brazil which took prices to $1.85/lb then.

JUL 12–Active September Arabica prices are down 1.85 cents per pound at $1.4745/lb in late session Tuesday as profit taking on the recent days rally is dominating trade, but prices have been holding on to most of their impressive 11-cents gain seen in the past two weeks and continue to push against the significant psychological barrier of $1.50/lb. (1:15pm EDT)

JUL 11–Active September Arabica coffee prices SURGED in trade Monday as market panic widened over the growing losses from the new 2016-17 crop in the world’s biggest coffee producer Brazil. The market opened higher and continued to rise throughout the session, with Sep prices settling up 5.20 cents per pund at $1.4930/lb while the more forward December contract closed up 5.10 cents at $1.5215/lb. The market has been rising in most sessions for the past two weeks and despite sporadic profit taking since the Brexit vote in the U.K. on June 23rd, the market is now an impressive 11 cents higher than the close two weeks ago. As predicted by SpillingTheBeans, the market has been rising in line with growing evidence of the multiple-faceted losses to the new harvest in Brazil. The Brazilian Robusta harvest is for the 4th consecutive crop cycle suffering severe drought damage and the Arabica crop is suffering losses both to quality and overall volume from excessive rains and, to a smaller degree, also from frost.

JUN 27–Active September Arabica coffee prices are up in early trade Monday as profit taking has set in after Friday’s heavy losses provoked by the Brexit decision in the U.K. which had nothing to do with the coffee market, but stirred negative sentiment in global markets. September prices were up $1.15 per pound at $1.3830/lb at 04:10a.m. EDT.

MARKET INSIGHT: Sep Arabica Coffee Ends Up 3.05 Cents At $1.4010/Lb Wed In Corrective Mood And On Brazil Frost Fears
JUNE 16–It’s bears playing bulls in the market on Thu as active ICE September Arabica prices are down 0.20 cent at $1.3990 per pound (11:35a.m.EDT) as bears in the market DESPERATELY try to keep the prices below the psychological barrier of $1.40/lb while switching positions from near-expired July, totally trying to IGNORE the frost damage to coffee in Brazil. Regardless of size of Brazil coffee losses, the new 2016-17 harvest in Brazil will now AGAIN be take a notch down. Market is highly manipulative!

*Sep Arabica Coffee Ends Up 3.05 Cents At $1.4010/Lb Wed In Corrective Mood And On Brazil Frost Fears. More forward December coffee closed up 2.95 cents at $.14270/lb while near-expired July futures settled up 3.10 cents at $1.3820/lb.

JUN 15 (SpillingTheBeans)–Active September Arabica Coffee futures were up 3 cents at $1.4005 per pound in late session Wednesday at the ICE exchange in New York as market players were catching up on damage reports from the attack of frost across key coffee producing regions in Brazil in the last five days. The move was in large attributed to a correction from Tuesday’s activity, where September prices closed down 2.25 cents at $1.3930 after a day dominated by technicalities as traders switched positions forward to September from the soon-to-expire July contract and needed to make room for price adjustments. But the deteriorating outlook for Brazil, which prior to the frost attack had suffered severe damage by heavy rains and winds and caused 30-40 percent of new crop cherries to fall to the ground, also weighed on the market and kept prices in higher territory.

More forward December prices were up 3 cents at $1.4275 as traders were evaluating the evidence of damage in Brazil, as Brazil’s leading coffee weather experts SOMAR said confirmed there has been damage and that “there will be losses” to both the new 2016-17 crop and the next 2017-18 harvest.
(MORE–12:45 EDT)

The confirmation of widespread damage across Brazil from the key coffee belt of Southern Minas to Sao Paulo and Parana — regions that account for over 60 percent of the total harvest and more than 80 percent of Brazil’s Arabica crop — has taken the market by surprise. This comes as Vietnam has confirmed it will harvest the smallest crop in 10 years, India is expecting the smallest harvest in 19 years and Indonesia’s coffee growing regions have for the 6th consecutive year been hurt. Across South-East Asia the dramatic cut in production is attributed to climate change with the El Nino phenomenon provoking one of the most severe drought in decades across the region. In Mexico and Central America, meanwhile, are expecting its lowest crop in 11 years in the current 2015-16 cycle and trailing the lowest production levels in 15 years.

*See more on the latest fundamentals moving world supply in the story below:

Screen Shot 2016-04-11 at 10.43.23 PM

MARKET INSIGHT: Arabica Coffee RALLY To 13-Month Highs Of $1.45/Lb On Brazil Frost Fears
JUN 10 (SpillingTheBeans)–Arabica Coffee futures surged to 13-month highs this week at the ICE exchange in New York with active July prices ending up 3 cents on Friday at $1.3695 per pound after three days with the market in panic mood over frost warnings in the world’s top grower Brazil. Prices reached $1.45/lb on Thursday, its highest levels since April 2015.

The market started to rally on Wednesday shortly after SpillingTheBeans could confirm extensive frost warnings across the top Brazil coffee producing region of Southern Minas, in addition to frost warnings for all of Sao Paulo and Parana. The frost warnings and extend of cold were later confirmed by Brazil’s leading coffee weather experts SOMAR and sent the ICE market into a panicked buying frenzy, generating trading of 112,865 lots for futures and 31,589 options, according to ICE data.

July Arabica coffee closed the June 8th-session up an impressive 7.45 cents at $1.3965/lb at 1-year highs and on Thursday extended gains to a 13-month high of $1.45/lb before aggressive profit-taking took prices back a notch. But with the frost alert extended through Monday June 13th across coffee regions accounting for over 60 percent of the total Brazilian coffee harvest and over 80 percent of the Arabica crop the market held on to most of the gains.

“Even if the damage might be limited this is not the time anyone wants to be short on their positions for Brazil, especially with so many other problems across the main producing countries in the world,” one physicals trader told SpillingTheBeans by telephone from New York.

Trading volatility is increased by the soon-to-expire July contract which creates additional technical-inspired trading when positions are either closed or moved forward.

Adding to the pressure from the frost alert, Dutch agricultural financial service providers Rabobank released a statement saying it had increased its deficit forecast by 1.5 million 60-kilogram bags to a deficit in the 2016-17 world supply-demand balance of 2.2 million bags pending growing evidence of crop failures across the world.

“Since our last outlook, the weather in India, Thailand and Brazil’s robusta areas has been drier than normal. We do not expect any major origins to have an excellent crop,” said Rabobank.

SpillingTheBeans welcome this news from Rabobank as we since January have called upon the market and roasters to not ignore the rapidly escalating stream of evidence of coffee crops cut short across the world because of the mounting negative effects of climate change. From severe drought to excessive rains, this is causing massive declines to the 2016-17 coffee crops in Brazil, Vietnam, India, Indonesia, Peru, Central America and Mexico, while some damage from El Niño-provoked drought in southern Colombia is also starting to show.

By Friday afternoon, local weather forecasts from both coops, Somar and other sources in Brazil had again extended the frost alert over Brazil’s Southern Minas region well into next week saying the current cold front continued to prove to be “more intense” than initially projected.

Germany’s Commerzbank also said the ongoing frost in Brazil is likely to keep pressure on prices as “the market will be keeping a close eye on the weather reports from Brazil over the next few days.”

Happy Coffee Drinkingheart

  Share...

Share This Article

4 Comments

  • Thank you, Maja, for all of your efforts to bring accurate information on what’s going on in the coffee market. I have friends who live in Brazil who are involved with coffee growers. They have confirmed all of your coverage of the frost damaging the crops to be true. You are the only one who is accurately reporting and giving the true picture. Unfortunately, there are those who have a vested interest in manipulating the coffee market for their own gain. I highly commend you for doing a great job! THANK YOU!

  • We stumbled over here from a different page and thought I should check things out. What a great read even though the content is very disturbing to those of us in the roasting business. Congrats on such a great blog, I’m following you now and will look forward to come back here for more updates.

  • Hi Maja,
    Now that it’s Game On, can you comment on the expected Biennial cycle in Brazil. What are your expectations for the percentage decline in Arabica production based on experience. Please be sure to factor in all the positive factors that producers can take to reduce the impact with the huge price incentives that exist.
    Your input much appreciated!
    M

    • Hi Morris, always appreciate hearing from you and Brazil’s Biennial cycle is certainly becoming more interesting as the current rally is evolving. I will stick to my comments and views from my extensive crop trip to Brazil back in May and repeat that plant health is not as good as expected in many regions across Brazil’s producing landscape. We have drought damage from the last 2 to 3 crop years still affecting branch growth; We still have frost damage that we know will hit a lot of key areas across Southern Minas in the next cycle; We have ongoing damage in Espirito Santo — plus the fact that the damage to the Conilon (Robusta) harvest there has been proven to come in along the most negative end of the scale in predictions, and after 3 to 4 cycles of consecutive damage it makes it impossible for trees and plantation to recover to any significant production level, even if good attention, fertilizer and other inputs are provided; We already know that flowering for the next harvest came late in many parts of Brazil, AND on top of all that we still have the impact of the biennial cycle, which we can expect to see big and large in regions such as Cerrado which did have a bumper crop. All in all, that means — and I am really playing along with the most bullish sentiment as far as production potential is concerned — IF weather is GREAT (which is rarely ever is), and IF there is less crop damage from all the multiple problems, and IF the robusta crop in Espirito Santo is able to make any level of recovery, we are looking at a very extremely optimistic estimate of only being down 10%-15% on the year. I still do not believe we have reached over 49 million bags in the current cycle, but will stick to my earlier figures of the 2016-17 harvest closing at 48M-49M range. Based on this we are preliminarily — pending on the final flowering results and prior to any further weather interruptions to the cherry development and bean formation period — I will put my preliminary forecast for Brazil’s next 2017-18 coffee harvest at between 41 million and 43 million bags. How does that sound to you Morris? Best from here, Maja

Leave a Reply

Your email address will not be published. Required fields are marked *