Arabica coffee futures declined 5.6% due to rain forecasts in Brazil, reversing previous gains. Cocoa prices steadied after hitting a four-month low, while sugar futures also saw a slight decrease. Brazil’s coffee traders are restructuring debts, and China plans to expand crop cultivation.
On Thursday, Arabica coffee futures on the Intercontinental Exchange (ICE) experienced a considerable decline, reversing the previous day’s strong performance amidst forecasts of returning rains in Brazil, the leading producer of coffee. Specifically, Arabica coffee closed down 22.8 cents, or 5.6%, at $3.8715 per pound, following a 2.9% increase on Wednesday. Dealers noted that predictions of rain in Brazil’s coffee-growing areas might negatively impact prices, despite recent hot and dry weather raising concerns about soil moisture levels.
Market analysts remarked that there were likely heavy sales by funds, as participants moved to liquidate positions and secure profits at the National Coffee Association convention being held in Houston. Additionally, Brazilian coffee traders Atlantica and Cafebras have initiated bankruptcy protection processes, intending to restructure their debts amounting to 2.12 billion reais ($368.5 million). However, this situation has been largely anticipated since it was previously indicated last year.
In related developments, Robusta coffee prices dropped by 3.8%, settling at $5,427 per metric ton. Conversely, domestic prices for robusta coffee in Vietnam have seen an increase due to the recent uptick in global prices. Vietnamese exports of coffee totaled 303,000 metric tons during January and February, reflecting a significant decrease of 23.5% from the same period last year.
Turning to cocoa, New York cocoa futures settled up $121, or 1.5%, reaching $8,187 per ton after hitting a four-month low of $7,770 earlier in the week. Swiss chocolate maker Lindt & Spruengli was downgraded to “reduce” from “add” by Baader Helvea due to valuation concerns and uncertainties regarding their outlook for 2025. JPMorgan has indicated that Lindt faces increasing volume and margin pressures, with material costs rising by nearly 25%, necessitating future price increases. Concerns have arisen that historically high cocoa prices may be impacting chocolate consumption.
Furthermore, London cocoa prices rose by 1.2%, reaching 6,443 pounds per ton, while raw sugar futures settled slightly lower, down 0.07 cents, or 0.4%, at 18.13 cents per pound after recently hitting a one-and-a-half-month low of 17.84 cents. Notably, an official report revealed that China plans to expand its cultivation of oilseed crops while stabilizing sugar production, along with cotton and natural rubber.
In summary, the coffee market is experiencing fluctuations due to weather forecasts and significant financial restructuring among key players in Brazil. Cocoa has regained some stability after reaching lows, yet faces persistent challenges due to high pricing impacting consumption. The sugar market also reflects a cautious outlook amid production adjustments planned by major consumers.
In conclusion, the coffee market is presently influenced by anticipated rain in Brazil and financial difficulties faced by traders, leading to a notable drop in Arabica prices. Cocoa has stabilized slightly but continues to grapple with high prices affecting consumption. The sugar market reflects adjustments in production strategies by major consumers like China, which could impact future pricing. Overall, these commodities highlight the ongoing volatility and complex dynamics within global markets.
Original Source: www.tradingview.com
