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Sat, 09/19/2020 – 15:15
The excess is so bad that warehouses in Brazil, the world’s largest producer and exporter, have never been so full. Trucks in the coffee heart of the country wait days to unload harvested cargo from a record harvest.
Prices in New York, the world’s benchmark index, fell 14 percent this week.
Supplies are building up while demand remains weak.
Arabica coffee is the milder variety preferred by roasters like Starbucks. With consumers still reluctant to return to cafes and restaurants in droves, consumption of premium grains is tepid.
In contrast, robusta beans, used in instant coffee and homemade blends, hold up a bit better.
London robusta futures are down less than 2% this year, while arabica futures are down 12%.
The collapse of the arabica comes after prices rose in the previous three months. The dry weather in Brazil had raised concerns about the next harvest, but since then the coffee belt has experienced some rains, alleviating the threat.
“Prices fell due to forecasts of rain in key growth regions” in the South American nation, which should boost yields, Caroline Bain, chief commodities economist at Capital Economics in London, said in a report.
Meanwhile, there have been some infrequent deliveries of Brazilian beans to warehouses approved by ICE Futures US. That could indicate that the nation’s suppliers still have a large share of the 2020 crop.
On Friday, arabica futures for December delivery fell 3.8 percent to $ 1.135 a pound in New York. Prices fell for the fifth day in a row.
Coffee traded below the 50-day moving average and approached the 200-day measure, which some traders often view as bearish signals.
BLOOMBERG
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