Coffee prices hit a two year high after Volcafe slashed their predictions for the Brazilian harvest this season and increased their estimated deficit figure for the world’s production as a whole.
Another shortfall in 2015-16 was also projected by the global coffee merchants, part of the ED&F Man commodities group, which sent further alarm bells around the industry.
The crop of Brazilian arabica was downgraded by over 6m bags, slashing their internal forecast to a number in the region of 28.4m whilst stating that the drought that has afflicted Brazilian farmers had “negatively affected the bean formation stage of crop development.”
In a modicum of positive news though for the Brazilian industry, estimates for their robusta crop were revised upwards, but that ray of light will provide little comfort to an industry which has seen its projected produce slashed with every passing week.
November estimates projected a 60m bag harvest which was cut by a sixth by the time January’s forecast hit the headlines. The most recent figure by Volcafe predicted a figure in the region of 45.5m – other commentators have gone even lower.
The numbers are a long way away from previous bumper years.
The market unsurprisingly pushed coffee prices upwards.
Futures on the New York market hit $2.13 per lb for May’s delivery, the highest total for a spot contract since February 2012, before easing back down a little before levelling at $2.08 per lb, but that number represented a 6% increase when compared to the previous day.
Contracts for July also increased, going up 5.5%
The low predictions came amid further weather forecasts of precipitation for most areas of the Brazilian coffee belt. Though this is positive news for Brazilian growers and farmers, this incoming wet spell combined with the normal or above-average rainfall has still come too late to repair the damage caused by the extended dry weather at the start of this year.