LONDON: Arabica and robusta coffee futures on ICE hit fresh 10-year highs on Tuesday, underpinned by container shipping bottlenecks, falling stocks, lower output prospects and upbeat sentiment in the wider financial markets.
March arabica coffee rose 0.8% to $2.5185 per lb at 1159 GMT, after rising earlier to $2.5235, the highest since 2011. March robusta coffee rose 0.8% to $2,333 a tonne, having earlier hit $2,334, also the highest since 2011.
Arabica is being boosted by expectations that output from top producer Brazil will slide this season and the next following the drought and frost that hit the country’s arabica growing areas earlier this year.
Stocks of the bean on the ICE exchange are currently near their lowest level in almost a year, with global container shipping backlogs and rising freight costs making the exchange the cheapest source of supply.
“Through technical studies we can see some projections into (the) $2.75 area. I think that is very likely in the short term,” said Cardiff Coffee trading in a note. Output of washed arabica in Colombia, the world’s top producer of the high-end bean on which the ICE contract is based, fell 22% year-on-year in November to 1.13 million 60-kg bags.
Rains, meanwhile, have disrupted the harvest in top robusta producer Vietnam while the COVID-19 pandemic has contributed to a cherry picker shortage.
March raw sugar rose 0.9% to 19.33 cents per lb. Dealers said the market continues to be led by the trend in energy and the broader financial markets. Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday.
“The contract is perhaps on its way back to putting in a reasonable bid for Indian raws,” said Commonwealth Bank of Australia. March white sugar rose 0.4% to $498.50 a tonne.
March New York cocoa fell 0.2% to $2,455 a tonne. Rains were below average last week in most of top producer Ivory Coast’s cocoa-growing regions, with more needed to ensure the harvest is strong in February and March, farmers said. March London cocoa fell 0.3% to 1,687 pounds a tonne.