DEC 31 (SpillingTheBeans)–March Arabica coffee prices ended the year on a higher note on Wednesday at the ICE exchange in New York with prices settling up 1.80 cents at $1.6660 per pound on the last trading day of 2014. Market activity has remained lack-luster through most of December, with prices retreating to slightly lower territory in what green bean traders in New York told SpillingTheBeans are in anticipation of higher prices starting to come back in early 2015.
“There is always a push and pull in prices and there has been no significant changes to fundamentals in the last few weeks, so prices have had the technical support to withdraw to slightly lower levels. But come January when the reality of very low stocks and inventories will start to show up, and prices will climb higher once more,” said one trader.
Prices started moving below the $1.80/lb-barrier in early December following a couple of reports that predicted slightly lower losses than expected from bad weather in the new 2015-16 harvest in the world’s biggest grower Brazil, for which picking starts in late April. But even if the outlook improves — which is still too early to predict until the flowering and bean formation period is completed in the second half of February — analysts overall agree that there will be a significant deficit in the 2014-15 world coffee balance.
SpillingTheBeans have since August 2014 maintained that prices remain in a range for now between $1.80 and $2 per pound, and even if prices in the last few weeks have dipped below the bottom mark, that does NOT change the fundamentals on which prices currently trade. Just as we saw prices in September move above $2 per pound all the way up to near 3-year highs of close to $2.30/lb, prices have similarly dipped below the $1.80 mark. This is all part of the sporadic high and lows on each side of the margin which is completely normal trading behavior in the physicals market.
As the market is preparing for the return to trading on Jan. 2, 2015, all eyes will be on Brazil and how the first post-flowering forecasts will come out, most notably by the Brazil Crop Supply Agency, Conab, which is scheduled to report its latest figures by mid-January. More forward May futures closed up 1.80 at $1.6930/lb.
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DEC 3 (SpillingTheBeans)–Arabica coffee prices ended higher Wednesday at the ICE exchange in New York as the market pulled back from the drop in prices Tuesday with the ongoing supply problems caused by the worst drought in Brazil in over 70 years lingering in the market. Active March futures settled up 0.25 cents at $1.8365/lb while more forward May futures closed up 0.25 at $1.8615/lb.
“The market is very conscious the supply situation remains extremely tight and that there are not a lot of stocks for any back-up in case there is suddenly a worsening of the crop outlook in any of the key producing countries,” one physicals trade in New York told SpillingTheBeans, adding: “The market knows it cannot go too low or everything could collapse at origin.”
DEC 1 (SpillingTheBeans)–Arabica coffee prices ended higher Monday at the ICE exchange in New York as the market rejected a new forecast predicting a higher than expected crop in the next 2015-16 harvest from Brazil, the world’s largest grower and exporter. Prices initially fell after the release of the report last week by the U.S. Department of Agriculture, but following the long Thanksgiving holiday weekend in the U.S. the Arabica market was back over $1.90 per pound as fears returned over the global supply shortage provoked in part by the worst drought in Brazil in over 70 years. Active March futures settled up 2.95 cents at $1.9040/lb while more forward May futures closed up 3.00 at $1.9290/lb.
For more details of the USDA report, please see: https://globalcoffeefund.com/coffee-price-weaken-on-revised-usda-production-forecast-for-brazil/
NOV 25 (SpillingTheBeans)–Arabica coffee prices ended higher Tuesday at the ICE exchange in New York as fears over the growing supply problems caused by the worst drought in Brazil in over 70 years continued to weigh on the market. Nearby and soon to expire December futures settled up 4.60 cents at $1.9425/lb while more active forward March futures closed up 4.55 at $1.9505/lb. The market will be closed for Thanksgiving holiday in the U.S. on Thursday.
NOV 19 (SpillingTheBeans)–Arabica coffee prices surged in early trade Wednesday at the ICE exchange in New York as new fears over the growing supply problems caused by the worst drought in Brazil in over 70 years penetrated the market. Active December futures surged 8.85 cents per pound higher before settling up 6.75 cents at $1.9785/lb while more forward March futures were up 8.45 cents to touch $2.0135/lb before settling up 6.20 at $1.9910/lb.
NOV 13 (SpillingTheBeans)–Arabica coffee prices closed higher on Thursday at the ICE exchange in New York, with futures settling firmly, and confirming, the new range established since late August in which prices are trading between $1.80 per pound and $2/lb. Active December futures settled up 4.35 cents at $1.8875/lb while more forward March futures closed 4.40 cents higher at $1.9315/lb, after last months with an impressive rally that took prices to the highest levels in close to 3 years.
As rains in the world’s largest grower have eased the worst concerns in the market over the worsening extent of the damage from the most severe drought in over 70 years, prices have for now settles below the $2/lb mark. But even if some sporadic rains after close to a 2-month delay finally arrived in most key coffee producing regions in Brazil last week, significant damage has already been caused to the yield potential for the next 2015-16 harvest.
Any reports of new rain trouble in Brazil can take prices back over $2/lb and if a significant drop in yields is confirmed in the first post-flowering forecast by the official Brazilian crop forecast agency Conab next December prices could quickly move toward $3/lb as global stocks in importing countries remain low and only account for between 5 to 6 weeks worth of world demand.
For more details and background on the prices and the rally last month, please see: https://globalcoffeefund.com/market-insight-dec-arabica-coffee-up-0-40-cent-at-1-88lb-oct-31-as-prices-stabilize-in-new-1-80-2lb-range/
For more price analysis and the fundamentals causing last month’s rally to the highest levels in close to 3 years, please see: https://globalcoffeefund.com/market-insight-arabica-coffee-prices-rally-to-new-4-mo-highs-dec-up-8-25c-to-2-0945lb-sep-2-on-new-brazil-fears/
For more analysis on Brazil, don’t miss our special report “Rain And Drought Put Brazil’s Coffee Crop In Doubt” for FREE at: https://globalcoffeefund.com/special-report-rain-and-drought-put-brazils-crop-in-doubt/
*For more MARKET ANALYSIS and recent Arabica prices, please see: https://globalcoffeefund.com/market-analysis-arabica-coffee-prices-surge-back-over-2lb-in-september-are-prices-in-new-1-80-2lb-range/
*For SpillingTheBeans’ full 2014-15 coffee market outlook and forecast for the coffee year ahead, see: https://globalcoffeefund.com/video-the-world-is-running-out-of-coffee-market-insight-live-from-coteca-in-hamburg/
*For more market analysis on the underlying fundamentals, please see: https://globalcoffeefund.com/market-analysis-world-coffee-market-headed-for-new-deficit-in-2013-14-cycle/
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