Arabica Coffee Futures Soar Amid Climate Concerns and Restricted Global Supply

The arabica coffee futures market closed the last session of the week with significant appreciation in the main contracts in New York and London. The rise was mainly driven by concerns about the global supply of the product. This upward movement reflects a direct response to uncertainties about global supply, especially due to unfavorable weather conditions in important producing regions.

The lack of rain in Vietnam and Brazil is at the heart of these concerns. Vietnam's National Meteorological Agency reported rainfall 41% below the long-term average in the Central Highlands, a crucial region for coffee production. This water deficit can significantly restrict global coffee production, leading to a rush by investment funds to buy coffee futures, exacerbating the price appreciation. In Brazil, the coffee harvest is advancing, but there are concerns about crop yield due to high temperatures and lower quality of the sieve in several regions, factors that can negatively impact total production.

In the physical market, the appreciation of coffee was also observed in the main trading regions of Brazil. This scenario reflects a heated market due to limited supply and high demand, with Brazilian producers benefiting from higher prices despite climatic difficulties. The continuity of these trends will greatly depend on weather conditions in the coming weeks and the ability of producers to mitigate the adverse effects of the climate on the crop.

Source: Notícias Agrícolas