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Coffee Futures Mixed as Output Forecast Improves

October 26, 2017 at 16:56 by Andrew Moran

Coffee prices are trading mixed on Thursday as a new production outlook shows that the expected deficit will be smaller than originally projected. Coffee futures have pared most of their losses, but are now trading relatively flat.

December coffee futures rose $0.005, or 0.04%, to $1.243 per pound at 16:43 GMT on Thursday on London’s ICE Futures exchange. Coffee prices have tumbled to a one-week low, and the commodity has lowered 15% year-to-date.

According to commodity brokerage firm Marex Spectron, it is estimated that the supply deficit in the 2017–2018 season will be 2.2 million bags, this is down from the four million bags that were initially forecast. The report expects output to hit 155.3 million bags, while global coffee demand will be at 157.6 million bags.

Rodrigo Costa, director of trading at Comexim USA, told the Fox Business Network on Thursday:

This does not mean that everyone is necessarily certain about how much will be produced next year, given that many producers, agronomists and exporters have warned of a growing degree of uncertainty due to defoliation in several areas of arabica.

Production is slated to surge because of stronger production levels coming out of Honduras and Vietnam. Analysts do say that it will be harder to predict for Brazil because the rainfall has been inconsistent throughout the torrential rain season. Meanwhile, the Arabica regions have been relatively dry since June, though rainfall has been increasing in recent weeks.

Jack Scoville, vice president of Price Futures Group in Chicago, said in an interview with Reuters:

Most areas will need to see some consistent rainfall now to keep the potential for a big crop alive as trees need to recover from stress from the production year last year.

Other commodities are in the red close to the end of the trading week. December sugar futures dipped $0.008, or 0.56%, to 14.10 cents per pound. December wheat futures dipped $0.0375, or 0.86%, to $4.315 per bushel. December soybean futures climbed $0.025, or 0.25%, to $9.857 a bushel. December corn futures tumbled $0.055, or 0.15%, to $3.505 a bushel.

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