Large delivery of Arabica Coffee to ICE Certified Stocks weighing on the price to react

Large delivery of Arabica Coffee to ICE Certified Stocks weighing on the price to react 

November 8 - 2022

Coffee Geography Magazine

Large supply of Arabica coffee to ICE Certified Stock is weighing on the global prices to react for the last couple of weeks. ICE stocks had managed a stock level between 1-5 million bags for the last couple of decades which is now experiencing a sharp decrease in its certified warehouses around 380,000 bags, a 23 year lows causing panic around traders. Traders have usually the tendency to weigh on futures contracts which has a greater impact on prices. According to the data from ICE exchange, stocks are critically low more while 160,000 bags are currently available in warehouse lagging behind to be certified for delivery against futures contracts to pass quality controls.

100,000 bags are on their way to the ICE certified warehouses which may have some impact on the price. Favourable weather in Brazil would contribute for better harvest and production in 2023 according to commodity forecast. That should push prices for exchange-grade Brazilian coffee, known as 'semi-washed', down to levels where it becomes economical to deliver the beans to ICE . 

Traders said physical prices for Brazilian semi-washed coffee dipped in September to levels where exchange deliveries became economical, as 250,000 bags are at or heading to exchange depots to be certified this year. 

The price is expected to a reverse on the bullish if the favorable weather holds up or with a depressed micro-economic situation in Brazil particular with the position of the Brazilian Real agains USD. For now demand is quiet. No one wants to buy as usual as roasters are stepping out of the market. The only natural buyer is exchange participants.