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

Talk of decent Brazil coffee harvest dents prices

Twitter Linkedin

Coffee futures made a poor start to the week, tumbling to their lowest in more than four months, amid talk drought damage to the Brazilian harvest may not be as bad as had been feared.

Arabica coffee for September fell 3.3% at one point to 166.10 cents a pound, its lowest since February, before recovering some ground to stand at 168.90 cents a pound in late deals, down 1.7%.

The decline was attributed to ideas that Brazil's crop prospects were not as poor as had been feared, after the early-2014 drought, with Jefferies Bache, in an article in Barrons, forecasting a harvest largely in line with last year's, and INTL FCStone foreseeing prices potentially falling to 150 cents a pound.

At Citigroup, Sterling Smith told Agrimoney.com: "It is true that supplies right now really are quite good."

Higher prices have lured the sale of beans left over from the 2012 and 2013 harvests, besides the boost to supplies from this year's continuing harvest, now about half completed.

At broker Price Futures, Jack Scoville said: "Farmers in Brazil are selling and exporting crops from the previous year to make up for any shortfalls in the current production."

'Malformed beans consistently'

However, Mr Smith voiced caution over expectations of the decline in futures lasting, saying that his intelligence showed that "reports from on the ground in Brazil over the weekend continue to indicate lighter, smaller and malformed beans consistently".

Supplies were lightly to "tighten up" as the season proceeds and stocks are run down, he said, adding that "I do think we will see higher prices".

While some coffee bears have pointed to a decline in hedge funds' net long position as evidence of speculators' reduced willingness to continue betting on higher prices, Mark Nucera, a longstanding coffee bull, flagged a reduction in the net short held by commercial investors.

Commercial investors reduced by 1,645 contracts to 73,322 lots their net short in arabica coffee futures and options in the week to July 1, contrasting with a drop of 1,294 contracts in the net long held by managed money, a proxy for speculators, according to the CFTC regulator.

CFTC data cut into the "producers, merchants, processors and end user" category saw a reduction of 1,454 contracts to 66,495 lots in their net short in arabica futures and options.

Smart vs smarter

"Commercials are buying coffee. You don't normally see that at this time of year," Mr Nucera said, with harvest periods in the "commercial category" typically marked by producer selling.

"And they know what physical supplies are coming out in the market."

The "smart money", as in hedge funds, "may be getting shorter in their arabica positions, but the smarter money is getting longer".

By Agrimoney.com

Twitter Linkedin
Related Stories

Evening markets: Ags gain, as funds begin to get that year-end festive mood

Ag prices recover, helped by the likes of more positive comment on US export competitiveness, and some more negative talk on Argentine rains

Rabobank 'no more bearish' on coffee prices, despite raising supply hopes

The bank upgrades world coffee supply estimates for this season and next made only two weeks ago. Will output deficit return in 2019-20?

Evening markets: ags overlook crumbs of comfort in Wasde to set fresh historic low

The Bcom ag commodity subindex ends at a fresh record low, as US export fears overtake upbeat interpretations of corn, cotton estimate revisions

Evening markets: Ags poop party lifting other commodities, shares

Wheat futures set another contract low, while arabica coffee hits its weakest close but one in 19 months, despite buying in other asset classes
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 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