Sustainable Harvest Coffee Importers’ Post

The Arabica coffee market began the week in dramatic fashion by dropping over 7% as increased margin requirements by the ICE exchange sparked an aggressive long liquidation. By midweek however, prices rebounded and pushed above the 330 mark as inventories remain below historical levels at destination warehouses. The current market dynamic has been tough to assimilate by coffee industry participants. It is generally acknowledged the market has detached from fundamentals, but there are 3 major themes that help explain the current predicament: - Just in Time inventory expectations by roasters have left them with very little coverage and exposed them to logistical hurdles. - Early crop projections, especially from Brazil, have proven way off the mark, resulting in overly optimistic supply expectations that have not materialized. - Uncertainty over EUDR implementation and qualified inventories in Europe added an artificial, yet very real, possibility of supply constraints. At any other time the market has surpassed 300, it has been attributed to a climatic event. This time around, however, it is not a market of Frost, but a market of Fear. Colombia is facing severe logistical challenges due to limited availability of containers and space on vessels. This comes at a critical time for the country in the midst of its main crop and record-high prices. The Arabica-Robusta arbitrage (the price gap between the 2 markets) had widened to 90 cents. As recently as September the price gap was below 30 cents. Extreme price volatility continued as the market operated in a wide range of 41.65 during the first week of the month, climbing 3.84% and settling at 330.25 #SpecialtyCoffeeCountry #CountryCoffee #SpecialtyCoffee #GreenCoffee #CoffeeRoasters #CoffeeImporters #CoffeeRoasting #RelationshipCoffee

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