Arabica Coffee Prices Decline as Brazil Prepares for Rain; Cocoa Stabilizes
Arabica coffee futures fell 5.6% amid rain forecasts in Brazil, while cocoa settled above four-month lows. Brazilian traders seek bankruptcy protection, and Robusta prices decreased. Cocoa in New York rose slightly after a low, affected by rising costs and consumption concerns. Sugar futures also declined, as China plans to adjust crop production.
On Thursday, Arabica coffee futures on ICE experienced a notable decline, decreasing by 22.8 cents, or 5.6%, to settle at $3.8715 per pound. This decrease followed a robust 2.9% increase on Wednesday and is attributed to forecasts indicating the return of rains in Brazil, the world’s leading coffee producer. Dealers mentioned that while moisture conditions remain a concern, recent hot and dry weather had previously elevated prices.
In addition to the weather forecasts, heavy selling by investment funds was observed as they opted to liquidate some of their long positions to secure profits. This insight came from a coffee broker present at the National Coffee Association convention in Houston. Furthermore, Brazilian coffee traders Atlantica and Cafebras have entered court proceedings for bankruptcy protection to restructure a significant debt totaling 2.12 billion reais ($368.5 million), though such news had already been anticipated within the market.
In the context of Robusta coffee, prices fell by 3.8%, reaching $5,427 per metric ton. Conversely, domestic prices for Robusta in Vietnam saw a slight increase due to elevated global prices and farmers’ expectations for higher returns. During the January-February period, Vietnam exported 303,000 metric tons of coffee, marking a 23.5% decline year-over-year.
Turning to cocoa, New York markets saw a rise of $121, or 1.5%, to settle at $8,187 per ton after briefly hitting a four-month low earlier in the week. Concerns about rising costs have warranted a downgrade for Swiss chocolate manufacturer Lindt & Spruengli by Baader Helvea, switching the rating from “add” to “reduce,” predominantly due to valuation issues and uncertainty surrounding future conditions.
Meanwhile, JPMorgan indicated that Lindt is facing increasing volume and margin pressures owing to an approximate 25% rise in material costs, which will compel price adjustments. Cocoa prices have recently been affected as excessively high valuations threaten chocolate consumption. In London, cocoa prices increased by 1.2%, reaching 6,443 pounds per ton.
Lastly, raw sugar futures settled down 0.07 cent, or 0.4%, at 18.13 cents per pound, following an earlier drop to a one-and-a-half month low of 17.84. China, one of the principal sugar consumers globally, plans to amplify oilseed crop cultivation while stabilizing sugar crop production, according to an official report. Concurrently, white sugar prices declined by 1% to $516.90 per ton.
In summary, the market is currently experiencing fluctuations due to changing weather patterns in Brazil impacting Arabica coffee prices, alongside significant developments in cocoa and sugar markets. Forecasts of rain contributed to a drop in Arabica coffee futures, while cocoa prices steadied after reaching lows. Economic pressures facing companies like Lindt highlight the challenges in the chocolate industry. Overall, these dynamics underscore the volatility present in commodity markets.
Original Source: www.tradingview.com
