March arabica coffee (KCH23) this morning is down -7.00 (-4.08%), and Jan ICE robusta coffee (RMF23) is down -13 (-0.67%).
Coffee prices Friday gave up an early advance and fell sharply on signs of abundant U.S. coffee supplies. Â Arabica today retreated from a 2-week high and sold off sharply after the Green Coffee Association reported that U.S. Nov green coffee inventories rose+1.1% m/m and +9.4% y/y to 6.39 mln bags. Â Also, ICE arabica coffee inventories jumped to a 5-month high of 743,011 bags Thursday from the 23-year low of 382,695 bags posted on Nov 3.
Robusta coffee has support on ever-tighter coffee inventories on news that ICE-monitored robusta coffee inventories dropped to a 4-1/4 year low Friday of 6,996 bags.
A large short position by commodity funds of arabica coffee futures could spark short covering pressure. Â Last Friday's weekly Commitment of Trades (COT) report showed funds boosted their net-short arabica coffee positions by +3,359 in the week ending Dec 6 to a 2-year high of 22,491 positions.
On the negative side, Conab on Thursday raised its 2022 Brazil coffee production estimate to 50.9 mln bags from 50.4 mln bags estimated in Sep, up +6.7% y/y.
A bearish factor for coffee prices was Tuesday's report from Cecafe that showed Brazil's Nov green coffee exports jumped +19.2% y/y to 3.39 mln bags.
Arabica coffee Monday posted a 3-week low as dry conditions eased in Brazil. Â Somar Meteorologia reported Monday that Brazil's Minas Gerais region received 81.1 mm of rain last week, or 124% of the historical average. Â Minas Gerais accounts for about 30% of Brazil's arabica crop.
A bearish factor for robusta is ample coffee supplies from Vietnam. Â The General Statistics Office of Vietnam reported last Thursday that Vietnam's Jan-Nov coffee exports were up +13.4% y/y at 1.58 MMT. Â Vietnam is the world's biggest producer of robusta coffee beans.
The International Coffee Organization (ICO) reported on Dec 2 that global coffee exports in Oct fell -1.9% y/y to 9.87 mln bags. Â
In a bullish factor, the USDA's Foreign Agriculture Service (FAS) on Nov 22 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 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.
Smaller global coffee exports support coffee prices after the Colombia Coffee Growers Federation last Monday reported that Colombia's Nov coffee exports fell -25% y/y to 854,000 bags. Â Colombia is the world's second-largest producer of arabica beans. Â Also, Cecafe reported on Nov 17 that Brazil's Oct green coffee exports fell -2.9% y/y to 3.18 mln bags.
In a bearish factor, the Green Coffee Association reported on Nov 15 that U.S. Oct green coffee inventories rose +5.8% y/y to 6,320,157 mln bags.
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.
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More Coffee News from Barchart
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- Sugar Prices Retreat as India May Allow Additional Sugar Exports
- Coffee Rallies as Crop Concerns Spur Fund Short Covering
- Coffee Climbs on Fund Short Covering
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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