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2503 views October 1, 2014 posted by Maja Wallengren

MARKET ANALYSIS: Arabica Coffee Prices Surge Back Over $2/Lb – Are Prices In New $1.80-$2/lb Range?

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OCT 1 (SpillingTheBeans)–Active December Arabica coffee prices surged back over $2 per pound during September and closed trade for the month at the ICE exchange in New York near the $2 per pound psychological barrier. Concerns over the ongoing drought trouble in the world’s top producer Brazil continued to weigh heavily on the market as producers and trade alike watched how September came and went without any significant improvement to the effect of the worst drought in over 70 years. The main flowering season in Brazil was scheduled to start during the last half of September.

As the fears over the impact of the Brazil drought loom high over the onset of flowering for the next 2014-15 harvest, the market seems doomed to accept that a new deficit of at least 10 million 60-kilogram bags will be a reality. With available stocks in importing countries currently at just about 17 million bags — or the equivalent to 6 weeks of world demand — there is little back-up for roasters and importers to rely on in the face of a worsening of the conditions in Brazil.

The world coffee market officially started the 2014-15 crop cycle on Wednesday and New York Arabica prices appear to have moved more firmly into a new range between $1.80 and $2.00 per pound. If the flowering conditions in Brazil do not improve there seem to be little to hold back prices from moving even higher as the U.S. main roasting season in October and November gets underway.

SpillingTheBeans has forecast world coffee production to reach 140.40 Million bags in the new 2014-15 cycle which compares to total demand pegged to reach between 150 million and 152 million bags. While a few select countries do hold the potential for seeing slightly higher production figures, most countries and regions are rather likely to continue to experience negative effects from climate change which would result in even lower overall output.

For SpillingTheBeans’ full 2014-15 coffee market outlook and forecast for the coffee year ahead, please see: http://spilling-the-beans.net/video-the-world-is-running-out-of-coffee-market-insight-live-from-coteca-in-hamburg/

For more on Arabica prices in September, please read on.

Happy Coffee Drinkingheart
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SEP 30 (SpillingTheBeans)–Active December Arabica coffee prices settled up 2.10 cents per pound at $1.9335/lb per pound on Tuesday at the ICE exchange in New York as concerns over the ongoing drought trouble in the world’s top producer Brazil persisted in the market. More forward March futures closed 2.05 cents higher at $1.9745/lb.

SEP 29 (SpillingTheBeans)–Active December Arabica coffee prices settled up 5.20 cents per pound on Monday at the ICE exchange in New York as concerns over the ongoing drought trouble in the world’s top producer Brazil returned to the market. December futures closed at $1.9125/lb per pound while more forward March futures closed 5.15 cents higher at $1.9540/lb.

SEP 19 (SpillingTheBeans)–Active December Arabica coffee prices closed down 3.15 cents at $1.8220 per pound o Friday at the ICE exchange in New York. Business was quiet as traders said the market continues to weigh the impact of the drought damage in Brazil, the world’s largest producer and exporter, but prices stayed over the $1.80/lb barrier, which psychologically could signal a new and higher minimum barrier for Arabica prices, traders said. The market is awaiting more details to assert the impact of the continuing dryness ahead of the flowering for the next 2014-15 harvest, for which the flowering season is scheduled to start by the end of September. More forward March futures were trading 3.15 cents lower at $1.8465/lb.

SEP 16 (SpillingTheBeans)–Active December Arabica coffee prices settled up 3.05 cents at $1.8525 per pound on Tuesday at the ICE exchange in New York. Trading volumes were light as the market continues to weigh the impact of the drought damage in Brazil, the world’s largest producer and exporter. The current 2013-14 crop, for which harvesting already has been completed, suffered severe damage following the worst drought in over 70 years, and dryness has persisted ahead of the flowering for the next crop.

“The current prices have already incorporated the damage to the last harvest but uncertainty remains with the dry weather and doubts over plant health, so the market doesn’t want to go too low,” one physicals trader told SpillingTheBeans by telephone from New York. More forward March futures closed 3.05 cents stronger at $1.8935/lb.

SEP 11 (SpillingTheBeans)–Active December Arabica coffee prices settled up 4.20 cents per pound on Thursday at the ICE exchange in New York as concerns over the ongoing drought trouble in Brazil returned to the market. December futures closed at $1.8545/lb per pound while more forward March futures closed 4.20 cents stronger at $1.8950/lb.

SEP 10 (SpillingTheBeans)–Arabica coffee prices settled sharply lower on Wednesday at the ICE exchange in New York after a combination of profit taking and funds liquidating long positions erased most of the gains from last month’s rally. Active December futures closed down 11.35 cents at $1.8125/lb per pound in a session with modest activity while more forward March futures closed down 11.30 cents at $1.8530/lb.

Traders told SpillingTheBeans that the drop in prices, however, was “mostly because of technicalities” and said the market continues to be under pressure by the worst drought in over 70 years in Brazil, the world’s largest producing country and exporter. The current 2013-14 crop, for which harvesting and processing is now being wrapped up, came in at least 10 million 60-kilogram bags below initial forecasts and is seen ending in a range between 40 million and 45 million bags. Flowering for the next 2014-15 harvest, meanwhile, is threatened by the continuing dryness and the plant health after the drought is also seen limiting the potential of the flowering period scheduled to start during the second half of September. Some analysts warned that the outlook for the crop ahead still looks bad as the world supply-demand balance could face a second year of deficit because of the smaller crops from Brazil two years in a row.

“We need something well in excess of 50 million bags in 2015/16 or we’re going to run into serious supply issues,” one European analyst told Reuters in a separate market comments. November Robusta coffee futures on the Liffe exchange in London, meanwhile, settled down $10 at $2,069 per metric ton.

Happy Coffee Drinkingheart
***
SEP 5 (SpillingTheBeans)–Arabica coffee prices settled lower on Friday at the ICE exchange in New York after origin selling and profit taking following the rally that led to fresh 4-month highs Monday. Active December futures closing down 4.40 cents at $1.9805/lb per pound in a busy session. More forward March futures closed down 4.35 cents at $2.0210/lb.

SEP 3 (SpillingTheBeans)–Arabica coffee prices settled lower on Wednesday at the ICE exchange in New York after origin selling following the rally that led to fresh 4-month highs Monday. But despite profit taking led by origin prices stayed firmly above the important psychological barrier of $2 per pound, with active December futures closing down 7.15 cents at $2.0230/lb per pound in a busy session. More forward March futures closed down 7.15 cents at $2.0625/lb.

SEP 2 (SpillingTheBeans)–Arabica coffee prices started September with another strong performance, taking gains from last week’s rally at the ICE exchange in New York firmly above the $2 per pound mark. Active December futures settled up 8.25 cents at 209.45 c/lb per pound in a busy session while more forward March futures closed up 8.30 cents at 213.40 c/lb, marking the highest level for Arabica prices in over four months as concerns widened over the extend of drought damage in Brazil. Last week futures appreciated 6.8 percent alone on the growing concerns from traders and industry alike over what impact a second consecutive world deficit might have on the global supply-demand situation. The current 2014-15 harvest in Brazil, the world’s largest coffee producing and exporting country, was severely damaged by the worst drought in over 70 years and the continuing effects of unusually dry weather are also expected to negatively affect flowering for the next 2015-16 crop which is due to start around mid-September.

For more on the recent rally in Arabica coffee prices, please see: http://spilling-the-beans.net/market-insight-sep-arabica-coffee-prices-dn-6-85c-on-aug-7-end-at-1-84lb-on-profit-taking-after-brazil-rally/

For more market analysis on the underlying fundamentals, please see: http://spilling-the-beans.net/market-analysis-world-coffee-market-headed-for-new-deficit-in-2013-14-cycle/

Happy Coffee Drinkingheart

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