March arabica coffee (KCH2) fell -3.15 percent (-1.22 percent) on Thursday, while Mar ICE Robusta coffee (RMH22) gained +9 percent (+0.40 percent).
Thursday’s coffee prices remained volatile. Arabica retreated from a new 10-and-a-half-year near-futures high, while robusta set a new four-week high. Arabica was under pressure Thursday as signs of increased selling by Brazil’s coffee producers emerged. According to Safras & Mercado, Brazil’s coffee producers sold 83 percent of their 2021/22 arabica coffee crop as of Feb 8, exceeding the five-year average of 78 percent.
Prices of coffee Thursday morning prices initially rose on dwindling global coffee supplies following a 22-year low of 1.035 million bags in ICE-monitored arabica coffee inventories Thursday. Additionally, robusta coffee inventories monitored by ICE fell to a three-and-a-half-year low of 9,039 lots on Thursday.
Wednesday’s Cecafe data was bullish for coffee prices, as it revealed that Brazil’s January green coffee exports fell 14% year on year to 2.9 million bags.
Global coffee supplies are tightening following the International Coffee Organization’s (ICO) Tuesday estimate of a global coffee surplus of 1.20 million bags in 2020/21, down from 2.41 million bags in January. Additionally, the ICO reported that global coffee exports in 2021/22 fell -1.6 percent year on year to 31.289 million bags from October 1 to December 31.
Brazilian real strength is also supportive of coffee prices, as the real (USDBRL) rallied to a five-month high against the dollar on Thursday. A stronger real discourages Brazilian coffee producers from exporting.
In the United States, the pandemic is easing, which will result in fewer restrictions, which will benefit social gatherings and coffee demand. The seven-day average of new Covid infections in the United States fell to a one-and-a-half month low of 219,390 on Wednesday.