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SECOND UPDATE: Arabica Coffee Prices Skyrocket Surpasses 259 Threshold AS Certified Stocks Continued to Fall

By: Diana Delgado, Contractor

SECOND UPDATE: Arabica Coffee Prices Skyrocket Surpasses 259 Threshold As Certified Stocks Continued to Fall

 

SECOND UPDATE: Arabica Coffee Prices Skyrocket Surpasses 259 Pound Threshold As Certified Stocks Continued to Fall

Coffee Network (Bogota)- Arabica prices on the InterContinental Exchange are trading sharply by 10.55 cents at 259.40 at the time of writing as certified ICE Arabica stocks continued to decline.

Volume is heavy with 104,0000 contracts so far with 70% of the volume related to switch activity as the coffee market approaches First Notice Day on Thursday February 17th.

The May contract was seen also higher by 9.95 at 259.20.

Trading has ranged between 259.50 and 247.90 for the March contract.

The sharp rise reflects that certified ICE Arabica stocks continued to decline. Certified Arabica coffee stocks fell 17,864 bags at 1.06 million as of February 8, sharply down from 1.54 million at the end of 2021.

Certified stocks have become the cheapest coffee in the market once freights and differentials are taking into the total equation, a trader said.

In addition, Iván Romero, the Honduras coffee representative to the International Coffee Organization and vice chairman of ICO, the coffee market will experience a shortfall in 2022 with demand surpassing supply.  

“We are about to enter a phase of coffee scarcity, mainly due to severe frosts in Brazil and the impact of climate change in other producing countries, such as the hurricanes that hit the producing areas of Central America and Mexico,” Romero said. Shortages in world coffee supply will continue for two to three years.

Rising international coffee prices are still below production costs for Honduras coffee producers, Romero added.

The strong rise in today’s coffee prices also reflect reduced Arabica supply from key nations like Peru and Colombia.

On Friday, the coffee growers federation said Colombia’s coffee production fell by 20% in January on the year hit by torrential rains last year that prevented the key flowering season to take place, and rains are expected to continue until April 2022.

Colombia is expected to produce 13-13-5 million bags of 60-kg, but analysts are already doubting that this Andean country may meet the target because torrential rains in early 2022 have prevented the key flowering season to take place in key provinces. The country’s weather office Ideam said more than 200 municipalities across the nation are in red alert because torrential rains may prompt landslides.

In Peru, meanwhile coffee exports fell by 13.1% last year on year as the Andean nation likely exported 3.1 million bags of 60-kg in 2021, missing its pessimistic target of 3.2 million bags, and sharply lower than the optimistic estimate of 4 million bags, according to the Peruvian coffee and cocoa chamber.

The estimate is based on January-November official figures. Shipments are much lower than the 3.570 million bags shipped in 2020, the Peruvian coffee and cocoa chamber added.

Robusta futures is trading higher at $2,270 per tonne, up $24/tonnes for the March contract. Trading has ranged between $2,275/tonnes and $2,233/tonne.

Brent crude rises 0.60 to US$91.40. WTI prices is up  0.71 to $86 per barrel.

Currencies in coffee producing-nations are appreciating. The Brazilian Real is appreciating  to 5.25103, while the Colombian peso gains to COP3,933.00, at the time of writing.

 

 

 
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