Coffee Prices Close Lower on Strong Coffee Output in Columbia
by cmdtyNewswires - 1 hour ago
Dec arabica coffee (KCZ19) on Friday closed down -3.00 (-2.48%), and Jan ICE robusta coffee (DFF0) closed down -19 (-1.43%). Coffee prices moved lower Friday with Dec arabica coffee at a 1-week low and Jan robusta coffee at a 2-1/2 week low. Bigger global supplies weighed on coffee prices after the National Federation of Columbian Coffee Growers reported Friday that Columbia Sep coffee production rose +4% y/y to 1.1 mln bags. Abundant supplies are bearish for coffee prices after the International Coffee Organization (ICO) reported Tuesday that global 2018/19 coffee exports during Oct-Aug rose +9.2% y/y to 120.3 mln bags. A positive for arabica coffee Friday was the rally in the Brazilian real to a 3-week high against the dollar. A stronger real discourages export selling from Brazil's coffee producers. Another supportive factor was the action by the ICO on Thursday to cut its global 2018/19 coffee surplus estimate to 4.05 mln bags from a Sep estimate of 4.96 mln bags. Current supplies have tightened after ICE-monitored arabica coffee inventories fell to a 1-year low of 2.264 mln bags Thursday. Also, data from Brazil's Trade Ministry on Tuesday showed that Brazil Sep coffee exports fell -9.5% m/m and -10.0% y/y to 2.693 mln bags. A supportive factor for robusta coffee was Wednesday's forecast by Vietnam's National Center for Hydro-Meteorological Forecasting that the Central Highlands, Vietnam's biggest coffee-planting region, will get 10%-25% less rainfall than normal this month. Also, Monday's data from Vietnam's General Department of Vietnam Customs showed Vietnam Sep coffee exports fell -23.1% m/m and -23% y/y to 100,000 MT, and that cumulative Jan-Sep coffee exports fell -12.0% y/y to 1.273 MMT. Vietnam is the world's largest producer of robusta beans. A potential bullish factor for robusta coffee is an extremely short position held by funds as Friday's COT data showed funds raised their short positions by 2,581 to 49,126 net short positions the week ended Oct 1, a record short position in data going back to 2011. The record short position may provide fuel for a short-covering rally. U.S. coffee supplies are ample after the Green Coffee Association on Sep 16 reported U.S. Aug green coffee inventories rose +1.8% m/m and +8.4% y/y to 7.224 mln bags. Big Picture Coffee Market Factors: World coffee production (Oct/Sep) in 2018/19 will climb +3.9% y/y to a record 169.727 mln bags with global consumption +2.1% y/y to 164.769 mln bags (ICO). The world coffee surplus in 2018/19 will climb to 4.958 mln bags from a 2017/18 surplus of 2.046 mln bags (ICO). USDA projects global 2018/19 coffee production will climb +7.1% y/y to a record 171.166 mln bags and global 2018/19 coffee ending stocks will increase by +11.6% to a 3-year high of 32.812 mln bags.
« Back to index