Robusta coffee prices surge this week to new highs

Prices are up 5.4% this week and have been driven higher by less output in top robusta grower Vietnam and low inventories.

Robusta coffee climbed to a fresh record in London trade on worries that poorer output will fuel bean shortages. The arabica variety also rallied and cocoa neared its recent all-time high.

Futures for robusta, the cheaper coffee type used in instant drinks, rose as much as 2.4% to the highest in data going back to 2008. Prices are up 5.4% this week and have been driven higher by less output in top robusta grower Vietnam and low inventories.

While the nation has enough beans to cover exports for the rest of the season, some farmers may keep limiting sales as they hold out for higher prices, said Do Ha Nam, the chairman of Intimex Group, the country’s largest shipper.

The coffee market has also been supported as hedge funds exit the cocoa market — where big shortfalls have sent prices soaring — and pile into coffee.

“Speculators are drawing parallels between cocoa and coffee, which is a bit surprising,” Rabobank analyst Carlos Mera said. 

“The big parallel that I can draw is all the coffee trees on average got older due to lack of field work and as a result we see the Vietnamese crop that is not growing,” the analyst said. 

Concerns are also mounting over next season’s output, with Vietnam expected to remain dry for the next five days, adding stress on crops, forecaster Maxar said in a research note. 

Plus, looming European deforestation rules may prompt a rush to buy before they kick in at year-end, according to Rabobank. 

Money managers increased their long-only arabica positions to the highest on record in the week ended April 2, according to last Friday’s Commodity Futures Trading Commission data. This week, that figure was boosted by more than 50,000 contracts, according to estimates by Peak Trading Research.

Bloomberg