By Maytaal Angel and Marcelo Teixeira
NEW YORK (Reuters) -The relentless coffee price rally continued on Thursday as arabica futures on the ICE exchange hit a new record approaching $4 per lb on extremely tight supplies and fears over the outlook for the coming crop.
Arabica coffee futures in New York, used as a benchmark to price deals around the world, hit an all-time high of $3.7685 per lb earlier in the day, up more than 15% already this year. They closed up 1.9% at $3.734 per lb.
Dealers said exchange data shows that top roasters such as Nestle and JDE Peet’s are under-bought and still have much buying to do while speculators remain bullish on coffee.
Supplies remain extremely tight in Brazil after severe drought last year dented forecasts for the coming crop. Brazil produces nearly half the world’s arabica.
“The real story is that supply has fallen much faster than demand. It really is that simple,” said Trishul Mandana, managing director for Volcafe, one of the world’s largest coffee traders.
“The tightness in Brazil and the current differentials are telling us the real story of the 24/25 crop – and which will no doubt quickly lead to the disappearance of certs (arabica-certified stocks at ICE). And things could get messy rather quickly,” Mandana added.
Certified arabica stocks started to diminish quickly in recent days, falling nearly 100,000 bags to around 900,000 bags.
There has been some hope that the situation in Brazil for the new crop might not be as bad as previously feared, thanks to rains over the past few months, but dealers said the latest weather forecasts have made people nervous again.
“Below-average rainfall in some (Brazilian) regions has once again fuelled fears,” trader Icona Cafe said in a report, citing forecasts for longer periods of dry weather and rising temperatures in key coffee regions over the next few weeks.
Supplies are also tight in robusta coffee, which is to some extent fungible with arabica even though it is used generally to make instant coffee rather than roast and ground blends.
Robusta coffee rose 2.2% at $5,734 a ton a metric ton, just shy of an all-time high for the contract.
Farmers in Vietnam, the world’s top robusta producer, are holding back sales in anticipation of further price gains while a sharp slowdown in trade and shipping is expected at the end of January because of Lunar New Year celebrations.
In other soft commodities, New York cocoa futures fell 4.6% to $11,207 a ton while London cocoa lost 3.5% to 8,817 pounds per ton.
Raw sugar was little changed at 19.47 cents per lb, while white sugar was stable at $522.70 a ton.
(Reporting by Maytaal Angel and Marcelo TeixeiraEditing by David Evans, David Goodman and Maju Samuel)
