Coffee Stages Recovery As Brazilian Real Lifts
20 May 2017 - 01:39AM
Dow Jones News
By Julie Wernau
Coffee futures bounced back Friday following a recovery in the
Brazilian real, which was pummeled Thursday amid a widening
political scandal in Brazil, the world's largest growing
region.
Arabica coffee for July rose 2.3% to $1.326 a pound on the ICE
Futures U.S. exchange. The contract will need to rise to $1.344 a
pound to undo Thursday's losses.
ED&F Man's Volecafe said Thursday's move in the currency
meant coffee was worth 3.6% more to producers in real terms,
encouraging sales.
Helping the bulls Friday, Rabobank said it expects a large
coffee deficit in the 2017/2018 crop year of 6.8 million bags
despite visible stocks of coffee that keep building. The firm said
stocks will come down as exports of coffee out of Brazil were down
24% month on month and 13.5% year on year in April.
The firm pegged its projections for a large deficit, following
years of shrinking deficits, to increased global demand for coffee
and it being an "off" year in Brazil's cycle of alternate higher-
and lower-producing years in arabica. The firm based its
projections for increased global demand for coffee on increased net
imports of coffee in consuming regions over the last two
quarters.
"The Brazilian real remains a potentially dominant bearish
factor," the firm said.
In other markets, raw sugar for July was up 1.6% at 16.28 cents
a pound, cocoa for July lost 1.1% to $2,061 a ton, frozen
concentrated orange juice for July lost 1.5% to $1.39 a pound, and
July cotton slumped 0.9% to 78.52 cents a pound.
Write to Julie Wernau at julie.wernau@wsj.com
(END) Dow Jones Newswires
May 19, 2017 11:24 ET (15:24 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.