Arabica coffee hits fresh 13-year high near $3 per lb

Luckin Coffee

21/11/2024 15:30

(Adds comments and closing prices)
    By Maytaal Angel
       LONDON, Nov 21 (Reuters) - Global arabica coffee prices
hit fresh 13-year highs on Thursday as the market remains
concerned about regulatory risk, the extent to which top
producer Brazil's crop might recover next year, and as it
digests bullish demand signals.
    According to Cepea/Esalq, a research centre at the
University of Sao Paulo, farmers in Brazil, who grow almost half
the world's arabica, have sold much of this year's crop and are
only trading when the price is attractive.
    This is despite recent price increases, the research centre
noted. Its index for local arabica prices hit its highest since
February 1998 on Monday, it said, boosted also by the limited
supply of robusta in top producer Vietnam, and in Brazil. 
    Arabica and robusta are to some extent fungible, so
shortages in one often increase demand and prices for the other.
    March arabica coffee  KCc2  futures on the ICE exchange,
used to set physical coffee prices around the world, settled up
3.2 cents, or 1.1%, at $2.957 per lb, having hit their highest
since April 2011 at $2.9750 earlier.
        January robusta coffee futures  LRCc2  fell 0.2% at
$4,787 a metric ton. 
    Next year's Brazil crop appears to have lost some potential
following the drought earlier this year, with soil moisture
still low despite recent rains, and local Brazilian brokers
citing trees with too many leaves and not enough cherries.
    "Anecdotal reports have suggested cherry production (in
Brazil) is low despite ample rains in October that boosted
flower production," said broker ADMISI in a report that also
pointed to 'sporadic rainfall' next week.
    On the demand front, China's Luckin Coffee  LC0Ay.MU  has
signed an agreement to buy $2.5 billion worth of coffee from
Brazil during the 2025-2029 period, or $625 million a year,
according to Reuters calculations. 
    In June, Luckin Coffee announced a deal to buy $500 million
worth of coffee from Brazil this year.
    "This is a fair representation of potential for growth in
relatively new coffee markets. Consumption in China is expected
to keep growing at around 16.50% year-on-year," said broker I
and M Smith.
    On the regulatory front, the market is concerned an attempt
by right-leaning parties in the European Parliament to water
down the EU Deforestation Regulation (EUDR) could backfire,
preserving an original December 2024 deadline rather than the
current proposal for a 12-month delay. 
    In other soft commodities trade, March London cocoa  LCCc2 
​​rose 1.7% to 7,084 pounds per ton​, having hit the highest in
nearly five months earlier at 7,135 pounds/ton, while March New
York cocoa  CCc2  ​​rose 1.7% to $8,635 a ton.
    March raw sugar  SBc1  ​​fell 1.2% at 21.38 cents per lb, 
having posted a sixth consecutive weekly loss last week, while
March white sugar  LSUc1  ​​fell 1% to $553.80 a ton.

 (Reporting by Maytaal Angel and Marcelo Teixeira; Editing by
Kirsten Donovan, Jonathan Oatis and Diane Craft)
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