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3560 views August 29, 2014 posted by Maja Wallengren

MARKET INSIGHT: Dec Arabica Coffee Prices End Up At $2.0120/Lb Aug 29 As Brazil Concerns Grow

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AUG 30 (SpillingTheBeans)–Arabica coffee prices extended gains from the last week’s rally on Friday at the ICE exchange in New York, with active December futures settling up 1.20 cents at 201.20 cents per pound in a solid session with good volumes. This took Arabica prices to a fresh 4-month high on the Brazil concerns while futures appreciated 6.8 percent this week alone, closing trade for the month firmly above the psychologically important barrier of $2/lb. Trade concern caused by a growing deficit in Brazil after the worst drought in over 70 years severely damaged the current 2014-15 harvest continues to weigh heavily on the market, as the continuing effects of the drought is also expected to negatively affect flowering for the next 2015-16 crop.

“The market is certainly seeing that 2015-16 is going to have some issues. I don’t think the funds are going to liquidate positions. The market is feeding off what we’re hearing on Brazil,” a London-based broker told Reuters in a separate market report. Funds are currently holding net long positions for Arabica coffee, gambling on supply problems driving prices even higher.

The latest rally was further supported by a new forecast by German trading house Neumann Kaffee Gruppe, which cut its figure for the next harvest in Brazil, the world’s largest coffee producer, while several other reports were released supporting evidence of poor soil and plant conditions less than a month before flowering is due to start around mid-September. More forward March futures closed up 1.20 cents at 205.10 c/lb.

The ICE exchange will be closed for trading Monday as the U.S. is celebrating Labor Day holiday.
Happy Coffee Drinkingheart

AUG 28 (SpillingTheBeans)–Arabica coffee prices rallied again on Thursday at the ICE exchange in New York, extending gains from the last week’s rally over the growing damage from drought in Brazil, the world’s largest producing country. Active December futures settled up 1.85 cents at 200.00 cents per pound in active trade while more forward March futures closed up 1.85 cents at 203.90 c/lb. A report released Tuesday by German green coffee traders Neumann cut a forecast for Brazil’s next 2015-16 coffee crop to produce only 45 million 60-kg bags, compared to its last figure for a harvest of 47.7 million bags. Another report by leading German statistician and analysts F.O.Licht late Wednesday further added to the growing concerns over both the current and next Brazil coffee crops as F.O.Licth published a special section about the drought in Brazil. Consensus in Brazil from producers to trade is the current harvest will yield a maximum of between 40 million and 45 million bags after the worst drought in 70 years devastated most growing regions earlier this year. Plant and soil conditions for the next 2015-16 crop, for which flowering is due to start next month, are also expected to be negatively affected. Soon to expire September futures settled up 2.25 cents at 194.65 c/lb.

AUG 26 (SpillingTheBeans)–Arabica coffee prices rallied again on Tuesday at the ICE exchange in New York, with active December futures settling up 9.80 cents at 197.45 cents per pound in a strong session. More forward March futures, meanwhile, closed up 9.80 cents at 201.20 c/lb as a new report by German traders Neumann cutting their forecast for Brazil’s next 2015-16 coffee crop hit the market. Neumann said it now expects the next harvest in the world’s biggest producing country to produce only 45 million 60-kg bags, compared to its last figure for a harvest of 47.7 million bags, Neumann said in a company report. Consensus in Brazil from producers to trade is the current harvest will yield a maximum of between 40 million and 45 million bags after the worst drought in 70 years devastated most growing regions earlier this year. Soon to expire September futures settled up 10.35 cents at 193.10 c/lb.

AUG 18 (SpillingTheBeans)–Arabica coffee prices were up in early trade Monday at the ICE exchange in New York, holding on to strong gains from last week’s rally on concerns over the extend of drought damage in Brazil. Active September futures were up 1.55 cents at 190.30 c/lb by 10:30 a.m. EDT, while more forward December are up up 1.50 cents at 194.65 c/lb.

AUG 15 (SpillingTheBeans)–Arabica coffee prices rallied on Friday to close the week higher at the ICE exchange in New York as concerns over the extend of drought damage in Brazil continued to weigh heavily on the market. Active September futures settled up 4.65 cents at 188.75 c/lb while more forward December futures closed up 4.70 cents at 193.15 c/lb.

AUG 11 (SpillingTheBeans)–Arabica coffee prices rallied on Monday to close sharply higher at the ICE exchange in New York as concerns over the extend of drought damage in Brazil weighed heavily on the market. Active September futures settled up 8.30 cents at 189.15 c/lb while more forward December futures closed up 8.30 cents at 193.35 c/lb.

As projected by SpillingTheBeans since early April, the market leans on sufficient technical support for the time being to ensure coffee prices stay in a range between $1.60/lb and $1.80/lb, with the occasional spikes in the market of up to, or over $2/lb. This price range remains extremely volatile and will change in either direction at any moment depending on whatever more news come from Brazil, just as we saw last month and again on Monday.

*For more insight analysis on the market fundamentals and why the supply deficit is growing, please see:
http://spilling-the-beans.net/market-analysis-world-coffee-market-headed-for-new-deficit-in-2013-14-cycle/

*For more on recent prices, please read on;

AUG 8 (SpillingTheBeans)–Arabica coffee prices closed lower Friday at the ICE exchange in New York after a week of mostly profit taking following last week’s rally on the Brazil frost damage. Active September futures settled down 3.15 cents at 180.85 c/lb. More forward December futures closed down 3.10 cents at 185.05 c/lb.

AUG 8 (SpillingTheBeans)–Arabica coffee prices opened a tad lower on Friday at the ICE exchange in New York but quickly moved higher in an attempt by the bull camp to push prices higher on the continuing momentum over growing frost damage in Brazil. The higher-than-expected damage count reaching markets from farms and producing regions across Brazil last week led to the highest levels in months and pushed prices back over $2 per pound. But profit taking quickly to prices back down and active September futures were trading down 2.55 cents at 181.30 c/lb in late morning trade while more forward December futures were 2.40 cents at 185.60 c/lb.

AUG 7 (SpillingTheBeans)–Arabica coffee prices ended lower Thursday at the ICE exchange in New York but stayed firmly over the $1.80 per pound mark and psychological barrier as the market remains concerned over the rising damage figures out of Brazil, the world’s largest producing country. Active September futures opened higher and reached $191.45 cents per pound before profit taking set in and drove prices down, settling 6.85 cents weaker at 184.00 c/lb. More forward December futures closed down 6.70 cents at 188.15 c/lb.

The ICE market for Arabica coffee was particular ripe for profit taking after last week’s rally that saw prices hitting $2.1110/lb in intra-day trading, the highest levels in months. The market started rebounding a few weeks ago after a new batch of trade reports from Brazil suggest much more severe damage from the drought that hit Brazil earlier this year than hoped by certain segments of the market.

But the concerns over the extend of the damage to the new 2014-15 harvest in Brazil, the world’s largest coffee growing country, are for real and the impact of the drought continues to be severe. Even if the rains that arrived to parts of the Brazilian coffee producing belt in late March and parts of April did ease a worsening of the damage, the rains were too little too late to impede the very severe damage already done.

This is why SpillingTheBeans already in early March was confident to release a preliminary adjusted forecast for the current 2014-15 Brazilian coffee crop to produce between 40 million and 45 million 60-kilogram bags.

BrazilRain2012Damage1

Many industry organizations and trade analysts have since them come along and supported this view, with Brazil’s National Coffee Council lowering its forecast for the 2014-15 crop to between 40.1M and 43.3M bags, from its last figure of 44 million bags.

As also projected by SpillingTheBeans since early April, the market leans on sufficient technical support for the time being to ensure coffee prices stay in a range between $1.60/lb and $1.80/lb, with the occasional spikes in the market of up to, or over $2/lb. But this price range remains very volatile and can change in either direction at any moment depending on whatever more news come from Brazil, just as we saw last week when prices peaked on July 31st and settled just under $2/lb.

We’ll be back with more detailed analysis on the situation in Brazil here soon. Happy Coffee Drinkingheart

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