London-traded robusta coffee was another contract which avoided the bank’s bearish call, with the fourth quarter price forecast lifted by $40 a tonne, albeit to a level, at $$1,380 per tonne, close to the futures curve.
Robusta futures, even after recent outperformance, “will likely continue to do well” given its preference in coffee blends drunk at home, and expectations by the bank of weaker 2020 harvests in Brazil, down 1.7m bags at 18.5m bags, and Vietnam, down 1.5m bags at 27.5m bags.
For New York arabica coffee, by contrast, the bank said it was “bearish” on the price outlook, standing by a forecast for fourth-quarter price of 110 cents a pound, a little below the 116.55 cents a pound being priced into the December contract.
“A record Brazil crop, combined with a still weak Brazilian real, and of rather good quality… will likely add pressure to prices and keep a lid on any further rally,” the bank said in its report, noting too a 12% gain in Colombian output in June, and the hit to arabica demand from its reliance on coffee shops hurt by Covid-19 restrictions.
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