Wednesday 16 June 2021

Surge in prices of top quality coffee

A shortage of high-quality arabica coffees has boosted spot prices in Central America, Colombia, and Brazil, catching speculators who bet on falling futures prices by surprise.

Coffee prices in reals are at their highest level since January 2018 , deterring exporters from buying.

Traders and analysts say the shortage is a major factor behind the surge in arabica prices on ICE Futures U.S., which have catapulted some 25% since mid-October amid a scramble for exchange certified ‘washed’ or quality arabica stocks.

- Advertisement -

The stocks have fallen from 2.5 million bags in March to 2.1 million with the harvest in Central America, Colombia, and Peru, the main source of washed arabicas, off to a slow start and with semi-washed Brazil arabicas tight amid crop quality problems.

The jump in prices has hurt speculators. The latest CFTC data showed they have now covered about 85% of the net short position of more than 50,000 lots held in early September, helping fuel the recent run-up in prices.

Brazil semi-washed arabicas can usually be substituted for washed coffee, but the quality problems have left them in short supply this year despite an overall abundance of unwashed arabicas.

In Honduras, washed arabicas are at a premium of around 6 cents over ICE futures versus a discount of some 4 cents in January, deterring traders from delivering the stock to ICE where it wouldn’t fetch a premium.

- Advertisement -

Honduras accounts for less than 10% of global arabica production but it makes up more than three-quarters of ICE certified stock and thus has a disproportionate impact on futures prices.

“For producers, Christmas has come early,” said a Switzerland-based trader.

“Roasters can go look at smaller (arabicas) origins, they’re normally at a discount (to the futures) but not anymore. All washed arabicas went up despite New York (futures) going up,” he added.

Traders say washed Colombian arabicas are at a premium of some 32 cents over ICE futures versus 16 cents in January.

The shortage has been brewing for much of this year, with historically low prices prompting farmers in Central America, Colombia and Peru to abandon their farms and head to the United States border.

ICE futures fell to 13 year lows in May, leaving spot prices in most regions save Brazil at or below production costs.

- Advertisement -

More recently with the price uptick, there are talks of exporters in Colombia and Brazil not honoring contracts and asking importers to roll them forward or cancel them for a fee.

“I heard some people are trying to roll over delivery to the next Brazilian crop,” said José Marcos Magalhães, head of Brazilian co-op Minasul, adding it is possible exporters are unable to fulfill the contracts on time either due to high prices or lack of quality lots.

Coffee prices in reals are at their highest level since January 2018, deterring exporters from buying.



- Advertisement -

We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

Related Articles

Plate rupture has potential for stronger quakes

QCOSTARICA - The 5.7-magnitude tremor, felt at 5:27 pmon Thursday, occurred...

The US improves travel alerts for Central America; Not Costa Rica and Nicaragua

QCOSTARICA - The United States has eased travel advisories for most...


Today’s Vehicle Restriction: June 9, “EVENS”

Today, Wednesday, June 9, only EVENS can circulate. The measure is countrywide and applied between 5:00 am and 9:00 pm, save for those under the...

Diseases, weather and low prices hit the orange sector in Costa Rica

HQ - The appearance of pests and diseases, in particular the 'dragón amarillo' (yellow dragon), the impact of the weather and a sharp drop...

The US improves travel alerts for Central America; Not Costa Rica and Nicaragua

QCOSTARICA - The United States has eased travel advisories for most Central American countries, with the exception of Costa Rica and Nicaragua, according to...

Estadio Nacional

QCOSTARICA - The multipurpose national stadium, the first modern sport and event arena to be built in Central America, located La Sabana. The stadium was...

eHow to Become Successful in Online Casino Betting 

To become a successful gambler in the online industry, there is a lot to cover. It can be known to be a vastly different...

Bribed with cars, sexual favors and money in exchange for road works contracts

QCOSTARICA - The OIJ uncovered a big pothole on Monday when it was announced that public officials had allied with construction companies that, apparently,...

New Television Program To Promote Family Fun

Q ENTERTAINMENT - Attention families of Costa Rica! A new contest program, led by Douglas Sánchez and Verónica González, is looking for participants who...

Cynthia Ann Telles named new U.S. Ambassador to Costa Rica

QCOSTARICA - Today, U.S. President Joe Biden announced his nomination of Dr. Cynthia Ann Telles as United States ambassador to Costa Rica. According to the...

Nicaragua’s Foreign Minister absent from the summit of Central American presidents

QCOSTARICA - The Daniel Ortega government sent its ambassador to Costa Rica, Duilio Hernández, as its representative to the summit of Central American presidents...


Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.