By Pimm Fox
Coffee prices for May delivery slumped more than 7% in New York, the most since 2010, after hitting a two-and-a-half month high on March 25. Uncertainty in grading coffee to be included in ICE warehouse inventories triggered today’s drop, as did profit taking.
Bags of coffee must be graded for size, moisture and defects before entering ICE warehouse inventories. But with the introduction of safety measures to stem the coronavirus pandemic the process is delayed. ICE Futures said it can’t guarantee the grading of Arabica coffee can be completed in time for the May 2020 contract expiration. As of March 19, there were more than 40,000 bags of coffee waiting to be graded, up from 2,200 bags a week earlier.
Supply-chain disruptions depleting stocks of coffee at key U.S. ports, and excess rain in top-producer Brazil and consumer grocery store demand is helping to support prices. But the shuttering of U.S. in-store operations at Starbucks and Dunkin Brands along with the shutdown of many independent coffee shops could blunt short-term demand.
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