BRASILIA, Nov 19 (Reuters) – Despite good prices, sales of the next coffee harvest in Brazil have advanced little over the last month, due to production uncertainties and expectations that prices will move still higher, Safras & Mercado consultancy said on Friday.
Arabica coffee on the ICE stock exchange in New York is at its highest level in nearly 10 years, reflecting concerns over supplies affected by adverse weather conditions.
Even so, the 2022/23 crop sales of the world’s biggest coffee producer and exporter advanced just one percentage point in the month to Nov. 12, to 26% of its productive potential, Safras & Mercado said.
“Production doubts, rumors about a lack of coffee deliveries and a bet on higher prices explain such behavior by sellers,” said Safras & Mercado consultant Gil Barabach.
He added in a note to clients that the short “spread” for longer positions on ICE also reduced sales interest.
The first arabica coffee contract at ICE KCc1 was quoted at around $2,369 per pound at around 1:30 p.m. Eastern, a higher value than quoted for the more distant KCc2KCc3.
Barabach said prevailing view is that prices can still go higher as they do not fully reflect losses inflicted this year by frosts and prolonged drought on output potential of the next Brazilian crop. So producers are holding out and postponing sales as much as possible.
Arabica producers have committed 29% of their 2022 harvest, and 18% in the case of conilon, according to Safras & Mercado, while commitment of the 2023 Brazilian crop remains at around 9%, mostly in arabica (12%).
(Reporting by Roberto Samora; Editing by David Gregorio)
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