Arabica Futures Fall For the Second Consecutive Session
Arabica Futures Fall For the Second Consecutive Session
Arabica prices on the InterContinental Exchange were trading 4.70 lower for the March contract, last seen at 184.65, the second consecutive session with losses.
The March contract traded as high as 190.50 and as low as 184.35. Volume is good with some 30,000 lots traded so far.
The May contract is trading 4.20 lower at 182 with 10,851 contracts traded so far.
The market falls for the second consecutive session. A favorable weather in Brazil is partly responsible for the drop in today’s market, as the most recent forecasts show good rains in the next few days, which should continue to improve soil moisture content.
The market could also be factoring in the release of yesterday’s Volcafe report. Volcafe has pegged Brazil’s 2024-2025 coffee crop at 68.2 million bags, representing a 0.7% increase from the 67.7 million bags estimated for the previous crop year.
This is comprised of 41.4 million bags of Arabica (up 17% year on year) and 33.8 million bags of Robusta (up 4.6% year on year).
The report also estimates that for the global 2024-2025 coffee year, the market will shift to a supply surplus of 2.1 million bags after three consecutive years of deficit. The report is higher than CONAB’s projection as well as a projected shift to a global surplus for the first time in three seasons.
Traders note that the action is observed most in the Mar/May switch, which is losing a little premium.
In Colombia, the world’s third-largest coffee production nation, El Niño weather phenomenon is already taking a toll on coffee plantations. Forest fires have been present across the nation and has intensified, burning some coffee plantations in the El Tambo town in the southern Cauca province. Extreme dry weather has prompted forest fires in the coffee-producing provinces of Antioquia, Cauca, Nariño, Santander, Cundinamarca, among others.
Out of the 1,100 municipalities that the country has, 495 municipalities are on red alert, 179 on orange alert and another 73 on yellow alert. There are three phenomena that are contributing to the emergency
Colombia is going through a high alert season with more than 70% of the country is under some type of forest fire alert.
In Bogota firefighters have spent more than 48 hours trying to control the flames in the Eastern Hills of the Colombian capital, which have not been able to calm down.
Between November 3, 2023 and January 20, 2024, 237 forest fires have been reported affecting 131 municipalities, according to the risk and disaster government entity
Robusta futures are also falling today. The March contract is trading $33 tonnes lower at $3,174 per tonne. It traded as high as $3,240 and as low as $3,162.
Commodities are mixed. Brent Crude Oil rose 1.12 points to 81.12.
The Dow Jones Industrial Average falls 99.06 points to 37,806.02.
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