March arabica coffee (KCH23) on Friday closed up +2.30 (+1.41%), and Jan ICE robusta coffee (RMF23) closed up +15 (+0.81%).
Coffee prices Friday moved moderately higher, with robusta climbing to a 2-1/2 week high. Â Signs of smaller global coffee output are bullish for coffee prices. Â The USDA's Foreign Agriculture Service (FAS) on Tuesday cut its Brazil 2022/23 coffee production forecast by -2.6% to 62.6 mln bags from a prior estimate of 64.3 mln bags. Â Also, FAS cut its Colombia 2022/23 coffee production forecast by -3.1% to 12.6 mln bags from a prior estimate of 13 mln bags. Â Robusta rallied today on signs of tighter supplies after ICE-monitored robusta coffee inventories dropped to a 4-year low. Â
Coffee prices also have carry-over support from Monday when Somar Meteorologia reported that Brazil's Minas Gerais region received 35.9 mm of rain last week, or only 72% of the historical average. Â Minas Gerais accounts for about 30% of Brazil's arabica crop.
Large hedge-fund short positions have raised the possibility of short-covering pressure in robusta coffee futures. Â Friday's weekly Commitment of Traders report (COT) showed that funds in the week ended Nov aa raised their net-short robusta coffee positions by 898 to a 2-year high of 29,439 contracts.
Robusta coffee prices have underlying support from tight inventories. Â ICE robusta coffee inventories fell to a 4-year low of 8,674 bags on Friday. Â ICE arabica coffee inventories fell to a 23-year low of 382,695 bags on Nov 3, but those inventories then rebounded by more than +43% to a 2-1/4 month high of 550,749 bags on Wednesday. Â In a bearish factor, the Green Coffee Association reported last Tuesday that U.S. Oct green coffee inventories rose +5.8% y/y to 6,320,157 mln bags.
Smaller global coffee exports support coffee prices after the International Coffee Organization (ICO) reported on Nov 7 that global coffee exports during Oct-Sep fell -0.4% y/y to 129 million bags. Â Also, the Colombia Coffee Growers Federation reported on Nov 4 that Colombia's Oct coffee exports fell -5% y/y to 942,000 bags. Â Colombia is the world's second-largest producer of arabica beans. Â Also, Cecafe reported last Thursday that Brazil's Oct green coffee exports fell -2.9% y/y to 3.18 mln bags. Â However, Vietnam's General Department of Customs reported on Oct 7 that Vietnam exported 1.73 MMT of coffee in the 2021/22 season that ended Sep 30, a 4-year high. Â Vietnam is the world's biggest producer of robusta coffee beans.
There is some optimism about Brazil's longer-term coffee crop outlook after World Weather recently said frequent rain and abundant sunshine had created a "pretty good environment" for Brazil's 2023/24 coffee crop. Â However, Cooxupe, Brazil's biggest arabica coffee cooperative, said that next year's harvest is likely to be as weak as this year's harvest due to the slow development of Brazil's new coffee crop.
In a bullish factor, Brazil's crop agency Conab on Sep 20 cut its 2022 Brazil coffee production estimate to 50.4 mln bags from a May estimate of 53.4 mln bags as adverse weather curbed coffee yields. Â This year was supposed to be the higher-yielding year of Brazil's biennial coffee crop, but coffee output this year was slashed by drought.
In a bearish factor, the USDA, in its bi-annual report released in June, projected that 2022/23 global coffee production would climb +4.7% y/y to 174.95 mln bags, primarily due to Brazil's arabica crop entering the on-year of the biennial production cycle. Â The USDA projects that 2022/23 global coffee ending stocks will climb +6.3% y/y to 34.704 mln bags.
More Coffee News from Barchart
- Cocoa Closes Moderately Higher on Weekend Short Covering
- Coffee Pushes Higher on Signs of Smaller Global Output
- NY Cocoa Prices See Support from Dollar Weakness
- Sugar Prices Slip on Lower Crude Oil Prices
/Microsoft%20Corporation%20logo%20on%20sign-by%20Jean-Luc%20Ichard%20via%20iStock.jpg)
/Advanced%20Micro%20Devices%20Inc_%20logo%20on%20phone%20and%20website-by%20T_Schneider%20via%20Shutterstock.jpg)
/Qualcomm%2C%20Inc_%20logo%20on%20phone-by%20viewimage%20via%20Shutterstock.jpg)
/Chipset%20held%20over%20rush%20hour%20traffic%20by%20Jae%20Young%20Ju%20via%20iStock.jpg)