Coffee Futures Rally: Brazilian Weather and Vietnamese Exports Drive Prices Up

The coffee futures market started the week with a significant appreciation in the main contracts, both in New York and London, driven by concerns about the weather in Brazil's coffee-growing regions. Prices rose sharply, with the December/24 contract recording an 830-point increase, reflecting market anxiety over potential damage to Brazilian crops due to recent frost occurrences. This climate uncertainty is further exacerbated by the memory of the 2021 frost, which severely impacted production, justifying the price hikes in the market.

Another factor contributing to the price appreciation was the reduction in coffee exports from Vietnam, the world's largest producer of robusta coffee. The 29.3% drop in Vietnamese exports in July reinforces expectations of a tighter global supply, especially at a time when the market is already tense due to weather conditions in Brazil. This global supply tightening further strengthened prices, demonstrating the influence that international conditions have on coffee futures prices.

In the Brazilian physical market, there was a mixed movement with technical adjustments in various regions. While some areas, such as Varginha and Campos Gerais, saw increases in prices for type 6 hard drink bica corrida coffee, others like Guaxupé and Machado showed declines. However, the peeled cherry type saw appreciation in both Guaxupé and Campos Gerais. These movements reflect the different realities and reactions of producers to weather conditions and the behavior of the futures markets, highlighting the complexity and volatility of the coffee market in Brazil.

Source: Notícias Agrícolas