Coffee Futures

Forex 2020

Junior member
31 0
Rabobank last Thursday raised its coffee surplus forecast for 2019/20 to 2.6 mln bags from 1.6 mln bags and for 2020/21 to 7.6 mln bags from 5.6 mln bags, citing the negative impact of the pandemic lockdowns on coffee consumption.
Arabica coffee prices were undercut by last Thursday's forecast by the USDA's Foreign Agricultural Service (FAS) that Colombia's 2020/21 coffee production will climb +2.2% y/y to 14.1 mln bags and that Colombia's 2020/21 coffee exports will climb +4.5% y/y to 13.5 mln bags. Colombia is the world's second-biggest producer of arabica coffee beans.
Coffee prices remain under pressure on concern that the pandemic-induced slump in the global economy will reduce coffee demand. Data May 7 from IRI showed that U.S. sales of coffee at supermarkets fell -20% w/w in the four weeks ended April 19. Comexim Ltd on Apr 22 said they expect no growth in global coffee demand this year and that there will be a 2020/21 global coffee surplus of 8 mln bags. Also, Brazilian coffee brokers are reporting that some international coffee buyers, mainly in Europe, are requesting that coffee shipments from Brazil be delayed up to 90 days as their coffee storage facilities are filled.
The International Coffee Organization (ICO) on Apr 28 forecast a global 2019/20 coffee surplus of +1.948 mln bags, illustrating a much easier supply situation compared with its March forecast for a -470,000 bag deficit.
Dry weather in Brazil is bearish for coffee as it accelerates the pace of the country's coffee harvest. Somar Meteorologia reported on Monday that rainfall in Minas Gerais was only 4.4 mm in the past week, or 26% of the historical average.
A supportive factor for coffee is dwindling U.S. coffee inventories after ICE-monitored coffee inventories last Wednesday fell to a 2-1/2 year low of 1.79 mln bags.
Ample supplies from Vietnam, the world's largest robusta coffee producer, are negative for robusta coffee prices. Vietnam's General Statistics Office reported Apr 29 that Vietnam's Jan-Apr coffee exports rose +4.5% y/y at 659,000 MT.
 

WalletInvestor

Member
80 25
I have also heard from several sources that coffee and cocoa - though not likely to disappear completely - will become a luxury. Sadly, it sounds realistic.
Edit: seems like some posts before mine have been deleted, rendering my comment quite irrelevant
 
Last edited:

MasterOfCoin

Established member
607 235
I don't entirely understand the replies in this thread suggesting dire doom and gloom for coffee.

The original post is well presented, informative and liberally populated with facts, statistics and references. It was obviously carefully researched and written and perhaps merits more attention over time as we observe how the factors outlined evolve and influence prices. Certainly it deserves revisiting as things change to reflect those changes.

Do we have any members with experience in agricultural commodity trades that could offer further insight?
 

TWI

Senior member
2,532 253
I was long coffee until that report which put a dent in the coffee book PnL.
It is hard to fight the facts presented in the report. I know Brazil has good forward sales, there was crop damage in central America and chart was shaping up nicely. I am back flat now. Cocoa ended up being the more sustainable trend.
 

TWI

Senior member
2,532 253
(Bloomberg) -- The world’s largest coffee producer Brazil will likely see output of arabica beans, the type favored by Starbucks Corp., fall 33% next year as dry weather persists just as farmers increased pruning of trees. That’s the forecast of Volcafe Ltd., one of the world’s largest coffee traders. Brazil will probably harvest 34.2 million bags of arabica coffee next year, down from 51 million this year, the Winterthur, Switzerland-based trader said in a report to clients seen by Bloomberg. The “tentative” forecast comes after a preliminary crop survey, which was restricted by the pandemic.



Brazil’s output was already expected to drop next year after this year’s record crop and as arabica trees enter the lower-yielding half of a biennial cycle. But dry weather and increased pruning after blossoming failed in arabica areas of southern Minas Gerais, Cerrado and Mogiana exacerbated the declines, with Volcafe cutting its forecast by 3.3 million bags from a June estimate. “Although typically coffee plants can withstand periods of low rainfall from May to August without causing any irreversible losses, prolonged dryness especially in Sul De Minas, parts of Mogiana and Cerrado over the last three months has caused below average soil moisture and a negative impact on blossoming,” the trader said. Flowers usually turn into cherries containing the beans.



The decline in Brazil’s output in the 2021-22 season will drive the arabica market into a record deficit of 11 million bags, Volcafe said, citing an estimate calculated on a crop-year basis, which starts when harvesting begins in each of the countries, spanning longer than a year. Most coffee traders usually look at balances for the 12 months starting in October. Coffee demand fell by more than 4 million bags in six months due to the pandemic, with global demand contracting 0.6% in the season that ended Sept. 30, Volcafe forecasts. While consumption is expected to rebound 1.2% in the current season, that will still be below the 5-year average of 2.6%, according to the report. Robusta coffee, the type used in instant coffee that’s also more prevalent in retail packages, has gained a boost as people drink more at home. “We project the share of robusta usage to remain elevated into next season,” Volcafe said.

-- Needless to say I am back in and a scale down accumulator.
 
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MasterOfCoin

Established member
607 235
(Bloomberg) -- The world’s largest coffee producer Brazil will likely see output of arabica beans, the type favored by Starbucks Corp., fall 33% next year as dry weather persists just as farmers increased pruning of trees. That’s the forecast of Volcafe Ltd., one of the world’s largest coffee traders. Brazil will probably harvest 34.2 million bags of arabica coffee next year, down from 51 million this year, the Winterthur, Switzerland-based trader said in a report to clients seen by Bloomberg. The “tentative” forecast comes after a preliminary crop survey, which was restricted by the pandemic.



Brazil’s output was already expected to drop next year after this year’s record crop and as arabica trees enter the lower-yielding half of a biennial cycle. But dry weather and increased pruning after blossoming failed in arabica areas of southern Minas Gerais, Cerrado and Mogiana exacerbated the declines, with Volcafe cutting its forecast by 3.3 million bags from a June estimate. “Although typically coffee plants can withstand periods of low rainfall from May to August without causing any irreversible losses, prolonged dryness especially in Sul De Minas, parts of Mogiana and Cerrado over the last three months has caused below average soil moisture and a negative impact on blossoming,” the trader said. Flowers usually turn into cherries containing the beans.



The decline in Brazil’s output in the 2021-22 season will drive the arabica market into a record deficit of 11 million bags, Volcafe said, citing an estimate calculated on a crop-year basis, which starts when harvesting begins in each of the countries, spanning longer than a year. Most coffee traders usually look at balances for the 12 months starting in October. Coffee demand fell by more than 4 million bags in six months due to the pandemic, with global demand contracting 0.6% in the season that ended Sept. 30, Volcafe forecasts. While consumption is expected to rebound 1.2% in the current season, that will still be below the 5-year average of 2.6%, according to the report. Robusta coffee, the type used in instant coffee that’s also more prevalent in retail packages, has gained a boost as people drink more at home. “We project the share of robusta usage to remain elevated into next season,” Volcafe said.

-- Needless to say I am back in and a scale down accumulator.
Thank You @TWI

It's nice to read an update on developments in coffee futures.

Thanks also to the Mod Team for cleaning up the thread by removing the spurious trashy comments that contributed little to developing the OP's informative observations.

(y)
 
 
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