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Robusta coffee futures - will they extend their decline in 2016?

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Robusta coffee futures fell sharply in 2015, by 21%.

That said, the decline was less marked than for prices of arabica coffee, which dropped by 24% in New York.

Robusta values were supported by concerns over drought in Espirito Santo, Brazil's main producing state for the bean, besides by a reluctance by Vietnamese growers to sell into a weakening market.

Will Brazil's worries deepen to allow a recovery in prices in 2016? Or will Vietnamese selling step up, and press values into further decline?

ABN Amro

"In the coming months, new data about the Brazilian harvest will largely determine the direction of [overall coffee] prices.

"Global demand for coffee beans has soared more than 40% in the past 15 years, while production only grew by 25% in the same period, according to International Coffee Organization statistics.

"The resulting decline in stock levels means that annual output fluctuations are having a major impact on prices.

"Robusta has lifted over recent weeks as bearish bets have been liquidated by the fund community.

"The El Niño story continues to circulate but doesn't appear to be ha a major impact on global robusta supply. The drop in conillon, Brazilian variety of robusta, output and the loss in Indonesia have further supported prices.

"This has narrowed the price gap between robusta and arabica.

"All in all, in view of the weather conditions together with tight stock levels, we foresee a slight increase in prices in the coming months.

"The upward potential is limited, however, as any rally is likely to be just further short covering as commodities as a whole remain out of fashion and supressed by dollar strength."

Commerzbank

"There is still a lot of time before the next harvest in Brazil. The outlook for the next robusta crop is gloomy again on account of water shortage. Uncertainty will remain high in the next few weeks. Array

Q1 2016: $1,600 per tonne

Q2 2016: $1,550 per tonne

Q3 2016: $1,500 per tonne

Q4 2016: $1,550 per tonne

Forecasts for quarter average price, spot London contract

"Many market observers therefore expect a crop of 28.5m or even 29m bags for the 2015-16 harvest in Vietnam. After good harvests and selling restraint – which did not have the desired effect of rising prices – record-high stocks are now already accumulating in Vietnam. This should weigh on robusta prices.

"We expect the deficits on the coffee market and low arabica stocks to be more strongly reflected in the [overall coffee] price trend in the coming quarters.

"That said, the further massive depreciation of the Brazilian real over the year expected by our foreign exchange analysts should weigh heavily on the arabica price and not leave the robusta price unscathed either."

Ecobank

"Coffee prices rose moderately in December. However, these gains did little to reverse the slump in coffee prices in 2015, with arabica coffee losing 23.1% and robusta coffee 17.2% over the year.

"Price weakness was driven by strong exports from Brazil and Colombia, and the weakness of their currencies against the strengthening US dollar.

"Going forward, prices are likely to strengthen in response to El Niño's devastating impact on the robusta crop in Vietnam and Indonesia, and the running down of Brazilian arabica inventories of the past two seasons, which should drive a second consecutive global deficit of 2m-3m tonnes in 2015-16.

"However, the ongoing strengthening of the dollar will limit any price increase."

Rabobank

"We remain quite bullish on robusta prices. Array

Q1 2016: $1,720 per tonne

Q2 2016: $1,720 per tonne

Q3 2016: $1,650 per tonne

Q4 2016: $1,650 per tonne

Forecasts for quarter average price, spot London contract

"August and September saw almost zero rainfall in South Sumatra and Lampung provinces [of Indonesia].

"We are currently expecting 16m bags of conillon from Brazil in 2016-17. This figure may prove optimistic in light of the worst rainfall levels of the conillon areas in at least 12 years, along with irrigation restrictions established in early October.

"Despite a significant global arabica surplus, the robusta deficit will cause physical tightness in the second half of 2016."

By Agrimoney.com

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