RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Coffee price hits two-year high on Volcafe data

Twitter Linkedin

Coffee prices soared to a two-year high after Volcafe cut its hopes for the Brazilian crop, and raised its estimate for the world production deficit, forecasting another shortfall in 2015-16.

The influential coffee merchant, part of the ED&F Man commodities empire, cut its forecast for the Brazilian arabica coffee crop, the world's biggest, by 6.2m bags to 28.4m bags, warning that early-2014 drought had "negatively affected the bean formation stage of crop development".

While the group raised its estimate for Brazil's robusta coffee production by 1.0m bags to 17.1m bags, citing "improved expectations of yield" for a crop which has greater access to irrigation, the overall Brazilian harvest was downgraded to 45.5m bags.

Although the some other observers have lower estimates, with Brazil's CNC producers' group estimating the harvest at 40.1m-43.3m bags, Volcafe is viewed by many investors as an important commentator.

Indeed, Volcafe's late-January estimate of a 50.7m-bag harvest, downgraded from a November figure of 60m bags, was a key spark to the rally which has lifted New York arabica coffee futures by some two-thirds since then.

'Second consecutive deficit'

Swiss-based Volcafe raised its estimate for the world production deficit in 2014-15 to 11m bags, from 6.5m bag, and cautioned over another shortfall the following season too.

The 2015 coffee crop will be borne on branches grown this year, which bear the flowers which emerge around September, from which cherries develop.

"The recent unprecedented weather has affected both the 2014-15 and 2015-16 crops," the broker said.

"Even under the most optimistic scenario for the 2015-16 Brazil crop, we expect a second consecutive coffee market deficit in that season."

Rains – but too late

The downgrade came amid forecasts for rain for Brazil's coffee belt, of which "nearly all" is expected to enjoy precipitation this week, according to weather group Somar.

In fact, much of the coffee belt, with the exception of parts of the cerrado of Minas Gerais, the top producing state, and outlying plantations in states of Bahia and Rondonia have received normal, or above-average rains, this month.

However, the precipitation has come too late to repair much damage from a dry spell which left the belt with rains much below average in the first three months of the year.

Indeed, "the harvest has started early due to advanced maturation of the beans, and some harvesting has already been done in some areas," Jack Price at US broker Price Futures said.

"The main part of the harvest could start in early May instead of the end of the month as would be normal."

Market reaction

Arabica coffee futures for May delivery hit 213.20 cents a pound in New York, the highest for a spot contract since February 2012, before easing back to 208.65 cents a pound in late deals, up 6.1% on the day.

The better-traded July contract was 5.5% higher at 201.15 cents a pound.

"It's pretty hard to know what damage has actually been done in Brazil, until we get a good feel for the harvest," a European trader told Agrimoney.com.

"But Volcafe's estimates are likely to be seen as more reliable than some others."

By Agrimoney.com

Twitter Linkedin
Related Stories

Soft commodities better bets than grains for 2018, says Commerzbank

Indeed, investors are overrating prospects for corn and wheat futures. But cocoa futures have scope for gains, and coffee could see a "price surge"

Evening markets: Brazilian travails send coffee, soybean and sugar futures lower

... while Canada’s crop upgrade sends wheat to a fresh contract low. But cotton spares blushes for ag bull, hitting a seven-month high

Evening markets: Soybean futures reverse - despite soymeal resilience

Soybean futures lose bouyancy, although fare better than wheat, which sets fresh contract lows. Sugar tumbles even faster

Agricultural commodity prices poised for gains - particularly in 2019

... FocusEconomics analysis of broker forecasts shows, even as the market negotiates what Bcom terms a "key test" of whether price lows have been set
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069