Coffee Price Update on 1412 Notable Surge on Both London and New York Exchanges Leave a comment
The coffee market has witnessed a significant and simultaneous surge on both international trading platforms, ICE Europe – London and ICE US – New York, following positive news from the Fed’s final meeting in 2023. Here are key updates on coffee prices and influencing factors.
Sharp increase on both trading platforms.
In the trading session on December 14, the international coffee market experienced a substantial rise on both major trading platforms, ICE Europe – London and ICE US – New York.
Robusta coffee prices on the London exchange increased by an additional $43 per ton, reaching $2,802 per ton. Meanwhile, Arabica coffee prices on the New York exchange also recorded consecutive increases over three sessions, with March and May delivery contracts rising by 3.40 cents/lb and 2.80 cents/lb, respectively.
FED maintains interest rates and impact on the market
The final Fed meeting in 2023 concluded with the decision to keep interest rates at 5.25%-5.50%. This decision has generated a positive momentum for the coffee and agricultural markets, leading to a continued increase in coffee prices. Monetary policy stability and the forecast of a potential interest rate reduction in 2024 are positive factors supporting the commodity market.
Concerns about global coffee production.
Risk of low production due to adverse weather conditions.
The coffee market is experiencing a series of fluctuations due to severe weather, particularly the El Niño phenomenon. The National Meteorological Institute of Brazil has issued warnings about the possibility of extremely hot and dry weather exceeding 40°C in the coming days, exerting significant pressure on Brazil’s coffee production, one of the world’s leading producers.
Supply shortages and the decline of the greenback.
The International Coffee Organization (ICO) report predicts a global shortage of approximately 7.3 million coffee bags in the 2023/24 crop year. Additionally, major coffee-producing countries such as Vietnam and Indonesia are grappling with reduced yields due to the impact of adverse weather conditions.
