Price of Arabica Coffee is expected to increase 10% in the last 6 months

05/02/2018

REUTERS / Analysts expect a 10% increase in Arabica coffee prices in the second half of this year as supplies tighten and show signs of diminishing.

Medium-term price of Arabica coffee on New York's floor at the end of 2017 will be at 150.00 cents, up more than 10.00 cents compared with the closing price on Friday. Reuters surveyed in February estimated that Arabica prices will be lower 155.00 cent.

Financial analyst Shawn Hackett said: "The coffee supply at the end of 2017 will be worse than today when the Robusta situation has shown signs of tightening from the previous year. In addition, medium-term Arabica coffee in Brazil is at its lowest.

Brazil's output of 2017/18 is expected to reach 50 million bags, of which 38 million Arabica bags and 12 million year old Robusta bags are lost yearly. Next season Brazil's yield is expected to recover, average yield of 2018/19 is expected to be 58.5 million bags.

About the Robusta Market

Robusta coffee futures prices are expected to reach $ 2,100 by the end of the year, down nearly 2% from the close of the week. Reuters surveyed in February the price was $ 2080.

Robusta prices increase in late 2016 and early 2017 due to low production in Brazil and Vietnam. According to some traders: The Robusta inventory is expected to remain tight at least until the new crop starts from mid November to January.

Vietnam's coffee output is expected to be 28 million bags in the 2017/18 season - Reuters data. Even then, according to ICO, Vietnam 's previous crop was only 25.5 million bags.

Brazilian Robusta production last season was 15.5 million bags, compared with 12 million bags this season.