The price of Arabica coffee has fallen nearly 20 per cent compared with the 22-month high it achieved in early November 2016 and was trading at 142.5 US cents per pound as of 19 December.
Commerzbank Research said improved weather conditions in Brazil have sent the price into a tailspin in recent weeks. “The now significantly weaker Brazilian real is also leaving its mark,” it said. “The price slide has been accompanied by a sharp cut in net long positions held by short-term-oriented market participants. After reaching a record high of over 59,000 contracts at the beginning of November, they have now been slashed to 21,600 contracts within a matter of weeks.”
The Robusta price has also fallen compared with its late-October four-year high, but is faring a great deal better than Arabica. This is primarily due to the more pronounced shortage of Robusta. In its latest monthly report, the International Coffee Organization (ICO) – very cautiously – describes the prospects for Robusta production as being “still less than optimal”.
However, said Commerzbank, the latest news of ample rainfall in Espírito Santo, Brazil’s main Robusta coffee growing area, which has been hit by years of drought, gives rise to hopes that production could rise at least slightly next year. Overall, the ICO still sees the supply of coffee as sufficient at present, despite the deficits of the two previous years.