LONDON, Nov 14 (Reuters): Arabica coffee futures on ICE hit their highest in 13 and a half years on Thursday as investors reassessed their view on next year's crop in top producer Brazil, and grew increasingly concerned about top robusta producer Vietnam's crop.
Robusta, typically used to make instant coffee, and arabica, typically used for roast and ground blends, are to some extent fungible, so shortages in one often lift demand for the other.
A physical broker in Brazil said he recently returned to arabica farms he has been monitoring since March, and they are showing a lack of potential despite the recent rains, with too many new leaves, instead of fruits.
"Are all farms like this? No, but I can't relax when a property like this one that I had a good expectation (for) is showing me lack of potential," he said.
Local Brazilian dealers said physical arabica prices were bubbling thanks to limited stocks and concerns about next year's crop. "Despite the recent rainfall, the soil moisture is low," they said.
March arabica coffee rose 0.7% to $2.7320 per lb at 1156 GMT, having hit its highest since early May 2011 at $2.7520 earlier. January robusta coffee was up 0.9% at $4,677 a ton, having hit a near one-month high of $4,684.
Recent storms have delayed Vietnam's harvest and rains remain a concern, according to traders in the coffee belt, who previously told Reuters they expect this season's crop could shrink by up to 10% to possibly the lowest in a decade.
BMI, a unit of Fitch Solutions, has hiked its 2025 average arabica coffee futures price KCc2 forecast from $1.90 cents per lb to $2.15 - the third-highest annual average nominal price on record, it said.
"With upcoming harvests in Brazil and Vietnam both now facing headwinds, the coffee market appears set to remain tight in 2025," said BMI.
Technicals signals also suggest higher arabica prices, according to Thomson Reuters analyst Wang Tao, who expects prices could rise towards a $2.7560-$2.8050 range, now that they have broken resistance at $2.7280.
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