Climate and Farmer Behavior Impacts

The July contract for robusta coffee experienced a significant drop of 2.5%, falling to $3,819 per metric ton after reaching a three-week high. This decline can be attributed to climatic conditions in Vietnam, where recent rains were insufficient and late, resulting in damage already caused by drought. This adverse climatic scenario directly impacts supply, creating market uncertainties.

In addition to climatic issues, Vietnamese farmers' behavior also contributes to price dynamics. Producers' reluctance to sell their harvests, even at high prices, suggests an expectation that values might rise further. This stance is linked to expectations about future supplies from Indonesia and Brazil, two of the world's largest coffee producers. Scarcity or abundance in these countries could determine the course of global market prices, keeping traders attentive to upcoming harvests and climatic factors in these regions.

In Brazil, the arabica coffee harvest is progressing slowly, which also influences the market. Experts note that this year's production is showing smaller bean sizes, which could compromise the quality and quantity of available coffee. Adverse conditions and slow harvesting in Brazil contribute to price volatility and underscore the need for constant monitoring of cultivation conditions and producers' marketing strategies.

Source: Investing.com