Brazil arabica crop to drop by 30% or more: Commerzbank
Improving demand outlook is supporting arabica price
By Manisha Jha
Arabica coffee rose to a 14-month high amid more signs of a smaller crop in Brazil and expectations for improving demand.
Rabobank cut its 2021-22 Brazilian arabica estimate by 3% to 36 million bags because of prolonged dryness, while consultant Bison Luxley forecasts production slumping by more than 40% to between 28.7 million and 30.5 million bags. These estimates came after traders from Volcafe and Ecom projected the nation’s crop to fall by about a third.
Rabobank also raised its global coffee-deficit forecast for 2021-2022 to 2.6 million bags, compared with a surplus of more than 10 million bags the previous year.
“Because of the low-yield year for Arabica and drought during the flowering period, the next Brazilian coffee crop from April is likely to slump by 30% or more,” Michaela Kuhl, an analyst at Commerzbank AG, said in a report. “At the same time, progress with vaccinations and fiscal stimulus programmes are fuelling hopes of growing demand.”
Arabica coffee for May delivery touched $1.393 a pound in New York, the highest for a most-active contract since December 2019. The 14-day relative strength index surpassed 75, indicating the commodity may have been overbought. Robusta advanced 1.1% in London.
In other soft commodities, cocoa climbed in New York, and sugar was little changed in London and New York.
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