Traders holding coffee beans in exchange warehouses are suddenly sitting on a jackpot.
Brazil’s arabica coffee crop losses are estimated at about twice the amount sitting in warehouses monitored by ICE Futures US, the main futures exchange for trading the beans.
Prices surged to a more than six-year high on Friday after the worst frost in two decades damaged crops and destroyed some trees in the South American nation, the world’s top grower.
Coffee prices surged 17 percent this week, topping US$2 a pound for the first time since 2014.
“The ICE inventory will become in high demand, and whoever owns it, is sitting on a gold mine,” J. Ganes Consulting president Judy Ganes said.
Brazil started increasing deliveries to ICE after a record crop last year. There were 2.18 million bags of coffee at the depots as of Thursday, with the bulk held at facilities in Antwerp, Belgium.
Crop losses for next year’s harvest in Brazil might range from 4.05 million to 5.2 million bags, according to an Ecom Research report seen by Bloomberg.
While prices eased on Friday after updated weather forecasts showed a lower chance of frost next week in Brazil, there is high risk for more frost through the middle of next month, and there have been freeze events after that date.
Also, the intensity of the chill this week damaged young trees, which is expected to affect crops for years, as those younger specimens might die and many will have to be replanted.
It takes about three years for plants to become commercially productive, dimming production prospects for years, Rabobank International has said.
Furthermore, Honduras, the top supplier in Central America, is struggling to recover from COVID-19 and hurricane effects.
CROPS TURNED TO FEED
Drought is withering crops on both sides of the US-Canadian border, prompting farmers to take the rare measure of baling up their wheat and barley stems to sell as hay.
The bales are providing much-needed forage for livestock operators struggling against a lack of pasture and soaring feed costs, and also signal smaller grain harvests that could keep crop prices high in the months to come. Temperatures are expected to soar next week in the Great Plains, further threatening parched farm fields.
The dry conditions highlight how extreme weather is affecting agriculture and stoking higher prices that have fueled food-inflation concerns.
Desperate farmers in both countries have requested emergency help from their governments, and some ranchers are selling off portions of their herds because of the dearth of feed.
In North Dakota, where the entire state is in a drought, hay crops are only 10 to 25 percent of normal, while cattle ranchers are reducing herds by boosting animal sales at auction, North Dakota Stockmen’s Association president Jeff Schafer said during a National Oceanic and Atmospheric Administration Webinar.
A hard turn to the left in South American politics might come with a silver lining for mining companies in the form of higher prices, Freeport-McMoRan Inc chief executive officer Richard Adkerson has said.
Policy uncertainty in Peru and Chile, which account for about 40 percent of global copper production, is supportive of prices as producers balk on pulling the trigger on investments, he told analysts on a call Thursday.
The shifting political winds are part of the challenges that mining companies face in meeting growing demand as the world transitions away from fossil fuels.
Copper for September delivery on Friday rose US$0.06 to US$4.40 a pound, up 1.9 percent for the week.
Gold for August delivery on Friday fell US$3.60 to US$1,801.80 an ounce, down 0.7 percent for the week.
Silver for September delivery on Friday fell US$0.15 to US$25.23 an ounce, down 2.2 percent weekly.
SELF-SUFFICIENCY: Alibaba is one of a number of Chinese firms that has answered Beijing’s call to invest in the development of cutting-edge technologies Alibaba Group Holding Ltd (阿里巴巴) yesterday unveiled a new server chip that is based on advanced 5-nanometer technology, marking a milestone in China’s pursuit of semiconductor self-sufficiency. The Chinese tech giant’s newest chip is based on micro-architecture provided by the SoftBank Group Corp-owned Arm Ltd, it said. Alibaba, which is holding its annual cloud summit in Hangzhou, China, said that the chip is to be used in its own data centers in the “near future” and would not, for the time being, be sold commercially. “Customizing our own server chips is consistent with our ongoing efforts toward boosting our computing capabilities with better
‘SHORT-TERM ECONOMIC PAIN’: A military takeover would only temporarily weigh on wafer production on both sides of the Taiwan Strait, IC Insights said Taiwan has more chip manufacturing capacity than any other economy in the world, US-based market information advisory firm IC Insights said in a research paper last week, cautioning that the nation’s strength could prompt China to attempt to take over Taiwan. Taiwan commanded 21.4 percent of global installed IC capacity, ahead of South Korea’s 20.4 percent, Japan’s 15.8 percent and China’s 15.3 percent, North America’s 12.6 percent and Europe’s 5.7 percent, IC Insights said. Taiwan is one of two countries that uses 10-nanometer technology or better to produce wafers, holding 62.8 percent of global capacity, with South Korea holding the remaining 37.2
AGGRESSIVE STEP: With the new processors, Apple is aiming at the high-end chips Intel has provided for the MacBook Pro and other top-end Macs for about 15 years Apple Inc on Monday took the most aggressive step yet to strip Intel Corp chips from its computers, announcing more powerful homegrown Mac processors alongside a total revamp of its MacBook Pro laptop computers. The company showcased the chips at an event called “Unleashed,” which also included its latest audio products. The new components, called the M1 Pro and M1 Max chips, are 70 percent faster than its M1 predecessors, Apple said. It also unveiled a redesigned MacBook Pro, adding larger screens, MagSafe charging and better resolution. With the new processors and devices, Apple is aiming squarely at the high-end chips that Intel has
PRICE SPREAD: Oil trading under the Brent futures contract is giving the US a hefty edge in pricing, increasing the rush to secure cheap fuel as winter approaches Asian demand for US oil is rising as the energy crisis boosts prices for other crudes that are priced against the global Brent futures contract. China and other Asian buyers have been snapping up supertankers of US oil for delivery next month and seeking more for December, some traders have said. Most buyers are seeking US grades that had recently slumped to the lowest levels in more than a year, with an added incentive after Beijing awarded millions of tonnes of crude oil import quotas. A wide spread between Brent and West Texas Intermediate (WTI) oil futures is accommodating higher US crude