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Arabica Futures Up On UK Central Bank Actions

By: Diana Delgado, Contractor

Arabica Futures Up On UK Central Bank Actions

 
Author Full Name
Diana Delgado
 

Arabica Futures Up On UK Central Bank Actions

Coffee Network - Arabica prices on the InterContinental Exchange are 2.75 higher based on the December contract, last seen at 220.55 in a slow market after Columbus Day in the US at the time of writing.

Arabica futures touched as high as 220.35 and as low as 215.55 with some 16,000 lots exchanged so far.

The Bank of England on Monday announced further measures to ensure financial stability in the U.K., building on its intervention in the long-dated bond market.

The Bank’s Financial Stability Committee on Sep. 28 announced a two-week emergency purchase program for long-dated U.K. government bonds — known as “gilts” — to restore order to the markets and protect liability driven investment (LDI) funds from imminent collapse.

The central bank announced on Monday that it would introduce further measures to ensure an “orderly end” to its purchase scheme on Oct. 14, including increasing the size of its daily auctions to allow headroom for gilt purchases ahead of Friday’s deadline

“The announcement pushed all types of raw materials including coffee as it supports the currency and the economy.  It also provides strength to the Pound and the Euro,” said a coffee trader.

Meanwhile, the difference between the December contract to the March contract is 10.45 cents amid low levels of certified beans.

But volume is low as some market participants are still on vacations after the US celebrated Columbus Day yesterday

 Vanusia Nogueira, International Coffee Organization’s executive director told Coffee Network, a devastating hairstorm in the Brazilian coffee producing province of Minas Gerais last week brings uncertainty to the coffee market as the hailstorm knocked down the flowers of an excellent flowering registered in the last week of September, Nogueira said.

“Everyone thought that Brazilian production for 2023 was going to be big, but again the hailstorm of last week devastated entire plantations…knocking down the flowers. We must wait to see if we register another flowering at the beginning of November,” she added, noting that an excellent flowering had been registered in Brazil in the last week of September.

Coffee, beans and fruit plantations (citrus, nectarine, peach, plum and avocado were mostly hit by hailstorm in the states of Minas Gerais and Sao Paulo.

When asked when the global coffee industry will have a shortfall of beans, Nogueira said high coffee prices are here to say for long because of a reduction of coffee production in Colombia because of 28 months of consecutive rainfall, lower production in Honduras, and the uncertainty of production of Brazil’s 2023 now impacted by the recent hailstorm.

Differentials on Colombian coffee continue to plummet to +55 over ICE, down from 82 three weeks ago.

In coffee-producing nations, the Colombia peso depreciated to the dollar slightly to COP4,623 pesos to the dollar. The Brazilian real weakens to 5.21641.

In today’s market, Brent Crude Oil falls 1.75 % to $92.69/ bl, while WTI prices stood at US$85.14 down $1.67 per barrel.

The Robusta futures increases $15 to $2,173 per tonne

The Dow Jones Industrial Average is down 93.91 to 29,202 points .

By Diana Delgado

 

  • Coffee

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