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Arabica coffee hits six-month high on tight supplies

Arabica coffee touched a six-month peak above $2 per lb on Tuesday, boosted by signs of tightening market supplies.

May arabica coffee on Tuesday closed up +4.25 (+2.11%), and May ICE robusta coffee closed up +2 (+0.08%).

Dealers cited signs that demand is holding up well while exports from key origins such as Brazil and Colombia are slumping.

Green coffee stocks stored at ports in top consumer the United States hit their lowest in 10 months by the end of March, data from the U.S. Green Coffee Association showed.

Morgan Stanley expects Starbucks Corp SBUX.O to post strong U.S. results for the second quarter and predicts continuing economic recovery in China.

July robusta coffee was little changed at $2,371 a tonne, having hit an 11-1/2 year high of $2,401 last week.

Coffee prices Tuesday closed moderately higher, with arabica posting a 6-1/4 month nearest-futures high.  Expectations for smaller global coffee supplies are fueling fund buying of coffee futures.  Also, ICE monitored arabica coffee inventories Tuesday fell to a 4-month low of 708,312 bags.  Robusta coffee fell back from its best levels Tuesday after ICE monitored robusta coffee inventories climbed to a 4-1/4 month high.

The Colombia Coffee Growers Federation reported last Wednesday that Colombia Mar coffee exports fell -19% y/y to 906,000 bags.  Colombia is the world’s second-largest arabica bean producer.

Robusta has support on global supply concerns after coffee trader Volcafe forecasted the global 2023/24 robusta coffee market would see a record deficit of 5.6 mln bags.  In addition, the Association of Indonesian Coffee Exporters and Industries said that Indonesia, the world’s third-largest robusta producer, will see its 2023 coffee production fall -20% y/y to 9.6 mln bags due to damage from excessive rainfall across its growing regions.

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