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ICE US Coffee C Futures - Jul 25 (KCc6)

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US Coffee C Futures Discussions

testing area 212-214 /on 4h
Colombia was expected, figure was not clear but it was expected since Dec 2023 WM and T report. It has to be assumed that when previous USDA projection for 23/24 production was made, it was made on the production numbers, projected in 2023 reports and then some adjustments (if any) in World Markets and Trade report of Dec 2023. Thus, while projections for 24/25 are still projections only, reduction on previous 23/24 (22/23) numbers, in fact, form almost final :) view at 23/24. So far projections 24/25 are flat on gross reduction on 23/24.
She along with some keyboard bull warriors are champions
Short Dude. Consider, the one has 50ha farm, trees of different age, possibly different clones, different exposure, high density, different stage of ripening, size, weight, etc ... How he will calculate ? Experience/Intuition based only, unless you want you evaluation to be +/- 25% :). You need some certain percentage to be collected to be able to give a reasonable numbers...
Conab is out Thursday :).
Honduras: 22/23 - reduction of 300kb; 23/24 : USDA - 6.5mb, POST - 5.5mb !!! (POST projection in 2023 for 23/24 was 7.92mb, now it is 5.5mb ... 2.42mb lower !!! ); projection 24/25 - 5.5mb.
Honduras report is very confusing as it reflects POST's high level of uncertainty: 7.92mb vs 5.5mb for 23/24 = 2.42mb or 31% for a small production... As it is POST who is on the ground, the probability is high, that 5.5mb figure for 23/24 will be assumed in 2025 report. If this will be the case, total reduction vs previous projection for 23/24 will be 2.42mb ! Otherwise, it is 6.5mb vs previously projected 7.92mb = - 1.42mb. Assuming both reductions, 22/23 and 23/24 --1.72mb. And 24/25 projection of 5.5mb vs current 23/24 of 6.5mb is a projection of 1mb ... lower.
Honduras is a good example. For the diff between 7.92mb and 5.5mb serious concerns have to be in play or, on the other hand, impossibility to come with more or less reasonable algorithm. Confusion in other words...
Peru: 22/23 revised from 4.2mb to 3.4mb, 23/24 - 4.2mb, 24/25 projected - 4.22mb, 22/23 reduction 800kb, 24/25 vs 23/24 - flat.
Consumption growth - about 4%.
Nicaragua: FAS/Managua anticipates coffee production in marketing year 2024/25 to rebound to 2.6 million 60- kilogram bags, as a return to average precipitation levels should support historical average yields. However, Nicaraguan coffee growers face global structural headwinds in marketing year 2024/25 on top of tight labor supplies needed to bring in the hand-picked coffee harvest. Dry conditions, reduced production, and delayed harvesting – all associated with the 2023 El Niño weather system – reduced overall coffee production in marketing year 2023/24 by ten percent.
R is flat last 3 MY. A, assuming reduction 10% reduction for 23/24. looks like: 22/23 - 2.5mb, 23/24 USDA - 2.5mb, POST - 2.25mb, 24/25 projection - 2.45mb. Thus, if to consider POST for 23/24 to become final number (usually is), -250kb. Or flat as it would be enough also :)...
Colombia: production for 23/24 was revised up to 12.2mb from 11.5mb (WM and T, dec 2023) previously projected, 24/25 is projected to reach 12.4mb, 200kb more vs 23/24. Increased rates of borer infestation admitted as Oscar was saying for months... Thus, 700kb should added to global balance :) 23/24 and roughly, 24/25 vs 23/24 production is seen ... flat.
From Barchart news (just part of news): In a bearish factor, the International Coffee Organization (ICO) projected on May 3 that 2023/24 global coffee production would climb +5.8% y/y to 178 million bags due to an exceptional off-biennial crop year. ICO also projects global 2023/24 coffee consumption will rise +2.2% y/y to 177 million bags, resulting in a 1 million bag coffee surplus.
USDA in its last WM and T report of Dec 2023 saw production for 23/24 as 171.4mb, consumption as 169.5mb. Both, ICO and USDA see 23/24 production higher 1mb than consumption and somehow ICO saw bigger production... :) So, the question is: if production growth was due to exceptional OFF cycle, does it mean that Brazil produced more than USDA thinks it did, or other origins somehow coordinated their cycles with Brazil ? :)
Alysson: "What draws general attention is the very bad sieve, this already shows that it will have a significant impact on the yield of the crop, it is a coffee with a smaller sieve, this is already clear in the south of Minas Gerais as a whole". Alysson attributes the lower sieve factor to the weather conditions recorded between the months of October and December. "The coffee didn't grow as much as it needed to, there was a lack of water and high temperatures, so the coffee couldn't grow normally."
Short Dude. Let's look at possible scenario for 25/26, Brazil, basing on current situation: 1) high temps and dry spells affected 25/26 crop as vegetative function was stressed (branches/leaves) and so, by definition :), less fruits may be (should be :)) produced; 2) higher rust rates were detected in SDM already - the rates may get higher on more weather issues, new infestation, etc; 3) 25/26 is OFF crop for A; 4) ES (R) 25/26 may get affected also as it was the case in 15/16 and after - combined effect on 25/26 crop in this case will be bigger; 5) all origins (lots!), affected in 23/24 on high temps/dry spells basis, will produce smaller crops in 25/26 as the result (science, A is 2 years crop :)) and it will fall on OFF crop in Brazil. :) :) :) :) :) P.S. Hurricanes ---> CA, higher fungus/pests in other origins, big mealybug problem in Vietnam :). All fantasy for now :) but if to consider in a very conservative way the market will get: A) roughly 5mb less on Brazil OFF cycle; B) 3mb consumption growth at 1.75%; C) 5mb all other origins combined. In total - 13mb. And 5mb for OFF cycle is really conservative, as it usually is within 10 - 20% range and ES possible drop and higher fungus/pest effect are not counted. :) So, it may be 15mb :), etc. That will make 2026 the year of Big Hope ! :) ( However, 2026 may surprise with a double La Nina (continuing) and drought in MG as couple of virtual :) studies, based on 100 years of drought history in MG, have shown possibility of a real drought in Brazil in 2026 :).).
Alysson from Procafe confirmed that Arabica best temps range is still 21-23C :). He knows well which cultivars are grown in SDM so, can be trusted :).
Bruno, the maturation of coffees from the Cerrado is more advanced compared to the South of Minas. What can you tell us about the region’s income?
Short Dude. Sensation or not - who knows :) ? But this is NEW 2.1mb R reduction that you have to subtract now from stocks or to adjust global production for 23/24. Thus, it provides a new balance for 23/24. If, by USDA , previous balance was 169.5mb consumption vs 171.4mb production, after this new R 2.1mb revision it is 169.5mb consumption vs 169.3mb production :) (assuming this specific R revision only !). The percentage of reduction is 25% (big) and it shows that USDA is not immune of big overvaluations indeed from one side, and quite serious weather influence on the other :). If I remember correctly, last time Indonesia produced R below 7mb in 2011 or so... By my rough calcs, after reports that have been out already, 23/24 production has to be adjusted by -3mb, assuming A+R up/down revisions made. Thus, new 23/24 COSM vs PROD would be 169.5mb vs 168.4mb.
Maja posted from Veracruz and shown some pics. No devastated farms... But not higher yield :) :) :) would be considered assuming weather issues recorded and ongoing. USDA hadn't see any problem now, while projecting 24/25, and stated just that: no higher yield. How USDA would project the loss, if it is impossible to calculate it at this stage ? 3% 5% ? 10% ? Put 10% - you'll create more panic, put 3% - means nothing for Mexico... Thus, the best approach is to declare flat and wait and see. Without irony at all, as USDA doesn't want market to blow. But USDA will not hesitate to adjust it for whatever percent on later basis as the market will adjust itself already well before that. :) But the one should not fool himself: 1) every flat projection for 24/25 is not good as it points to Brazil even more :); 2) back years revisions are taken into the account by big market players as the exports; 3) next crop is OFF crop.
Comments I've seen re MG : expectation was about 15% up, can end up down 2%, 3%,... up to 5%. MAY BE ! only, but if it would - would be fully intact with science and weather. 3% of MG would be 1mb or so... Same about ES, besides there was a historical precedent for ES, well documented. All may not happen at all. But if it will, 5% for ES and 3% for MG will make roughly another 2mb.
With the volume exported by Brazil 23/24, I imagine that we will have a major review for Brazil 23/24 production.
Tks Viriato ... The USDA reports have landed in my Spam folder, I can now read them again.
:) :) :) I was way too much - I know :) ! I'll stop spamming on this :). No agitation or prophecy - just wanted to get some feedback from the ground, etc. The rest of the month is full of reports - we'll see it all, including ECF stocks.
CONAB in the next few days
Indonesia: 24/25 A+R projected to be 10.9mb, R - 9.5mb, A - 1.4mb. 23/24 A+R revised from Nov 2023 9.7mb (A - 1.3mb, R - 8.4mb) to ... 7.7mb, A - 1.4mb, R - 6.3mb. A roughly flat, R revised down for 23/24 for 8.4mb - 6.3mb = 2.1mb !!!
But the 23/24 crop is history, harvested and sold, so is this revision such a big sensation? More interesting should be the forecast for 24/25? It's a bit strange that R is expected to increase by 50%, seems unrealistic!
Short Dude. In relation to Indonesia it means that revision decreased 23/24 R production for 2.1mb ADDITIONALLY to what you new before, so R global balance for 23/24 should be adjusted accordingly (lower R stocks for this amount somewhere). 2.1/8.4 x 100% = 25% - this is the example of overestimation USDA did at the time :). For simplicity, you may adjust 24/25 stocks for such a USDA adjustment, etc. If in fact 23/24 R in Indonesia was 6.3mb and 24/25 is projected 9.4mb, in relation to 23/24 base :) it is 50% increase in one year !!! Brazil gets jealous and nervous !!! :) For India, as example, adjustment would produce about 250kb, etc. From all the reported origins till now, a total correction to downside (production/stocks) that has to be applied to a global balance, is roughly 3mb already. :) We still have Vietnam, Brazil, Ethiopia, Uganda, Honduras, Peru, Nicaragua, etc to report. To reach my 5mb, to which we'll need to add 3mb of consumption growth, we need just 2mb.
Till now, all of the reported origins have shown revision to the downside and besides Indonesia, flat projections. 50% growth for R in one year, even basing on big drop previously (but flat area) - :) :) :) ! USDA approach is simple: 1) No panic is needed; 2) as potential loss can be somehow big, no reason to guess it but to project flat 24/25 and then to see how and what; 3) remember :) - at the time when projection is made, forecaster considers that going forward all meaningful factors will not work against the projection. It is perfectly normal (you can't forecast otherwise :)) but current circumstances and coverage is once in a while issue (300 years or so). Karnataka produces about 70%, suffers drought, it will not kill the farms, etc, clear, but can it produce more in such circumstances ? Honest answer would be NO. If sun and high temps have been able to cause abortion and smaller beans in ES for conilon, will R act differently in the same conditions :) ? Let's wait for CONAB and look at ES figures.
Costa Rica came out being projected for 24/25 1.185mb (POST) vs 1.144mb USDA for 23/24, reduction 255mb, executive summary not optimistic :), rising consumption. (Production in 22/23 was roughly 1.4mb). Guatemala, El Salvador and Costa Rica combined reduction roughly 550mb, rounding a bit to bigger side :). In percentage reduction about 17%. Intact with El Salvador :).
I saw videos, produced in ES, starting from Nov 2023 and then every couple of months, showing development of the problem. Green trees but less beans and some are smaller - exactly, as it is described in the studies. And no emotional comments and full explanation that it is different for every farm as it depends on altitude, location, density, irrigation, age of trees, etc - one to one as in the studies. And conclusion about drop for a ES as a state, made on the weather stations data in the state without particular numbers of possible drop. No panic, just admittance of the fact. Brazil is absolutely amazing when it comes to research, practices, clones, education and promotion of new product, but it is not immune weather wise. Logically, some new/modified pests/diseases should be next and/or higher infestations. Nobody knows at this point but the news should be watched. At the time rust made a lot of damage in CA and not only !
Maja finally commented on Mexico 24/25 expectation: not optimistic :) at all, it's gonna be a smaller crop. USDA is next :).
Sorry, CONAB is next. USDA will tune CONAB :).
Well, here comes Costa Rica: FAS/San José projects marketing year 2024/25 coffee production to remain near record low levels, as exchange rate challenges, persistent labor shortages, and above average precipitation forecasts prevent the sector from rebounding. Sluggish export sales in 2024 are exacerbating already challenging financial and agronomic conditions for Costa Rica’s nearly 27,000 coffee growers, who are likely to delay or reduce investments in rust resistant varieties, fertilizer applications, and other cultural practices 22/23 - roughly 1.4mb; 23/24 - decreased from 1.44mb to 1.181mb (POST), -18% revision :), 24/25 projection (POST) - 1.185mb, increase of ...4kb :) :) :). Consumption rising from 385kb 22/23 to 415kb 23/24 to (projected) 420kb 24/25 (POST). 1.44 - 1.181 = 259kb to subtract from global balance. Follows Guatemala and El Salvador.
Almost unchanged means from previously revised for -259kb number :). Summary doesn't sound optimistic. Up to now, El Salvador, Guatemala and Costa Rica combined subtracted from global balance about 550kb :) or 10% from may be would be 5mb :). Nobody knows, but I would risk to say that summary for CR doesn't point to any increase in production (4kb :)) in 24/25. If we would keep USDA number for 23/24 as one and only valid (not POST), then we would call it just :) projected decrease in production for 18% from 23/24 to 24/25 :). Nicaragua and Honduras are next :).
For fun: funds are getting/reading same reports and see same figures/comments as all of us here :).
As harvest has started, Noticias agricolas, 15/05/24: (In practically all locations, producers have reported low yields at this early stage of the harvest, with lower quality for the youngest coffees, which are green and small, with little sieve 17 above, as explained by Cepea researchers. For Robusta, the harvest in Rondônia and Espírito Santo is ahead of Arabica, as usual, but the low quality scenario for these first batches is also verified. According to data analyzed by Cepea, in Rondônia, around 30% of the coffee has already been harvested; and, in Espírito Santo, between 10% and 20%. ) This just first impression for sure as the harvest just started. Though 30% for RO and roughly 15% for ES would be :) more indicative than 5-10% for Arabica.
Even moderately high temperatures may affect crop productivity, by changing the balance between respiration and photosynthesis, the latter being increased to a greater extent, and to inadequate storage capacity. Economic production often depends on the development of organs like leaves and fruits, which under excessive high temperatures can grow too fast in relation to the available photosynthetic resources, resulting, e.g., in small leaves and shrunken fruits.
Final: Therefore, in our opinion, the coffee plant possesses a higher tolerance to elevated temperatures than most classical work seems to indicate. Otherwise, coffee productivity would be quite low in tropical environments, where leaf temperature easily reaches values above 30ºC during a great part of the day, especially in the outer leaves of the canopy, as already noted by DaMatta (2004a). Furthermore, rates of both photosynthesis and vegetative growth of the coffee tree are maximal throughout the warm season, as occurs in the main Brazilian producing areas (Silva et al., 2004). Therefore, in our opinion, the coffee plant possesses a higher tolerance to elevated temperatures than most classical work seems to indicate. Otherwise, coffee productivity would be quite low in tropical environments, where leaf temperature easily reaches values above 30ºC during a great part of the day, especially in the outer leaves of the canopy, as already noted by DaMatta (2004a). Furthermore, rates of both photosynthesis and vegetative growth of the coffee tree are maximal throughout the warm season, as occurs in the main Brazilian producing areas (Silva et al., 2004).
Coffee cultivation in the open is the usual practice in many parts of the world, and this provokes leaf exposure to high irradiance and the absorption of much more energy than that usable by photosynthesis. Such conditions may cause an energy overcharge and to an overheating of leaves that, in extreme cases, can reach temperatures of 40ºC or even above (Maestri et al., 2001), especially if stomata are closed, as occurs on sunny days in unshaded plantations . Only under these extreme conditions of high irradiance would the negative effects of high temperatures in fact promote leaf chlorosis and burning. To make a long story short :), it makes no sense to expect of devastation but without any doubts, high temps alone affect the vegetative function and the yield. And this is where the game of numbers starts: if, as example, only 10% of farms were affected to a dangerous extent or 50% ? In a case for ES 14/15, 15/16 as specific study has shown, coverage was serious.
OJ at fresh ATH :)
It has everything to do with the price, and it has nothing to do with the price
Incaper: conilon cultivars for ES, yielding between 50 and 60b/ha (within first 4 years, non-irrigated) are known since 1993, most productive (at the time !) was launched in 2004 and yielded on average 70b/ha in first 8 non-irrigated crops, while improved clone reached about 120b/ha :). But for desired yield, tech recommendations and specific practices had to be followed. Thus, CONAB's yields of 54b/ha for RO and BA are nothing strange, assuming now is 2024 :), but ES yield of 42b/ha should have some meaning :) :) :).
So, higher infestation is in play: Since last year, a problem has been taking away the peace of many coffee growers: the difficulty in controlling the mealybug from the Pseudococcus group, a new species that has affected conilon coffee plantations in the North of Espírito Santo and the South of Bahia. The dry period and low humidity have been pointed out as the causes of this scenario in the coffee plantations. ... this new Pseudococcus Group does not settle in the roots, but attacks branches, leaves and fruits. The pest has been causing damage since the middle of the second half of 2023, when heat and high temperatures intensified.
For fun: Young mealy bugs can be spread over long distances by wind. Adults can be carried by ants that travel from affected to unaffected plants. Ants also protect the mealy bugs from predatory insects. Therefore, controlling ants will allow predators to feed and reduce mealy bugs.
It was pointed out several times already :), but many :) :) :) other origins are not that advanced as Brazil is. What doesn't mean that the pest, etc should devastate every farm :), but most likely means that yield loss would be a bit bigger than in Brazil, if the pest is present and all the factors being equal. I would also risk to say the same about fungus. Besides, some studies confirm that high temperatures (longer periods) provoke mutations of fungus (different ones) and it starts often when temp crosses roughly 37C, etc. In some cases mutations increase can be 3-fold,4-fold,5-fold, etc... Not each new mutation would be more dangerous, but some usually are...
Viriato the prices really are not as good as Mario would say. The exchange rate in the producing countries must be taken into account. In the case of Colombia, COP has appreciated a lot against the USD, so the internal price that producers receive is very low and more serious with discounts due to low quality.
Agricultural News: "Logistics and climate crisis affecting all origins, Brazil expands coffee sales to producing countries Vietnam increased its purchases by more than 200%, while in Mexico the volume exceeded 800%"
Consumption growth in Mexico was about 5%, CAGR till 2027/28 was projected about 5.9%, consumption started slowly moving toward outdoor consumption but still main product is soluble. :)
El Salvador, USDA, May 14, 2024: 1) El Salvador's coffee production is expected to reach 555,000 sixty-kg-bags in marketing year (MY) 2023/24. The Salvadoran coffee sector continues to be affected by climate vulnerability and an absent long-term strategy. The MY2024/25 crop is forecast to reach 560,000 sixty-kg-bags. Lack of labor availability due to migration in rural areas is affecting farm activities such as pruning, tree renovations, and berry picking and processing. In addition, prices for inputs remain high, increasing production costs.
2) area - flat, trees - flat, production for 23/24, estimated by USDA was 670kb , POST revision - 555kb, revision of 115kb or 17% !!!; POST projection for 24/25 - 560kb :) :) :) (5kb or 0.9% - nonsense projection). Thus, from USDA 670kb for 23/24 to 555kb projected reduction is 115kb or 17%. (If to consider that 23/24 was 555kb, then last 2 seasons 22/23, 23/24 and projected 24/25 are flat :) ).
El Salvador does not play a major role, but percentage is what is important. Initial USDA projection went out to be revised for -17%.
why rocket up now? This commodity surprises me with tht much daily votality
3% daily is nothing special with coffee.
USDA, May 10th Guatemala: Post forecasts that production in MY 2024/2025 will slightly decrease to 3.25 million 60-kg bags, down from the MY2023/2024 estimate of 3.26 million 60-kg bags. Production for MY2022/2023 closed at 3.26 million 60-kg bags but has been revised down 6 percent from previous Post estimate. The reduction in the estimate is due to various factors, with the extended El Niño year being one of the main factors negatively impacting the 2023/2024 harvest. Although it has been a relatively dry harvest season, rust is present in farms that are not well managed. The coffee borer continues to be an important pest as mature coffee falls to the ground and cannot be harvested given the permanent lack of labor (migration driven) affecting Guatemalan agriculture.
As MGom would say, current prices historically are very good for both, A and R, and for sure many producers did and will do their best to capitalize on it. Ferts calmed down, etc - there are some real incentives there... But 35 - 40C temp is still a factor... In my view, the one who is cyclically bullish (as myself) should not fool himself with 30%, etc devastating numbers... but to pay attention to a macro picture, besides Brazil...
You're right Bruno. If the damage has already been done, the rains will not solve it. The rains will only help the leaves recover and absorb nutrients to prepare for the next harvest.
Tropical paradigm is needed :) in this season indeed ! :) Because otherwise a total picture of 23/24 will look kinda nervous, including Brazil. (Consumption in El Salvador grew for 8% recently :), about 88% of Salvadorians drink coffee on a daily basis, on flat production. )
why is this sudden big drop
Non-Commercial Speculative sector is in possesion of almost 12.3 million bags. And some people say there is no coffee.
As of Jan 31, Mexico, Conagua: (The problem is exacerbated because 61.59% of the Mexican territory presents moderate to exceptional drought, indicates the latest report from the National Water Commission (Conagua), which in the southern border region, where Chiapas is, reports a 50% .7% 'abnormally dry' surface, 22.9% with moderate drought and 8% with severe drought.) Add to drought (from place to place, not every first farm) high temps. Can Chiapas show increase ? Hardly :). Besides, as it was seen with Brazil, effect may last not just one year and so, 2025 may underproduce...
Vietnam export got smaller in April, to 2.5mb and -24% YOY and 18.4% MOM. Export fell in March after 4 consecutive months of good export (above average).
Update from the weather guy I follow: Besides equatorial Pacific and several other areas, above average temperatures are predicted worldwide from June to August. Hotter summer for many parts of NH, humidity levels above normal. Active hurricane season and above normal rainfall in India, China, Japan but below normal rainfall in Philippines and parts of SA.
Though not in the green :) but we got weekly close over 200 :).
Also worth noting: 1) how many contracts specs close on the move from 245 to 192 (basis June); 2) lots of pics of trees from different origins that circulate in the internet do not actually show very high degree of damage, not comparable with the pics that have been circulating after one of a kind :) drought in Brazil; 3) rains start coming to some areas and eventually all areas will get it, sooner or later. On the other side, 5% of could be :) :) :) (nobody knows !) reduction of all main origins without Brazil would make about 3mb. May will bring the first clarity to ALL !
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