Coffee Market Turbulence: Price Drops and Risk Aversion

Tuesday was marked by intense price adjustments in the coffee markets of London and New York, reflecting significant corrections and a risk-averse atmosphere, along with a rise in the dollar. Both Arabica and Robusta coffee futures contracts experienced considerable declines, with benchmarks like July/24 and September/24 showing significant drops. In London, Robusta also declined, despite ongoing concerns about Vietnam's supply.

In addition to coffee-related factors, the market was influenced by dollar trends, which saw a global appreciation. This appreciation was attributed to investors' defensive posture ahead of the US interest rate decision and due to the holiday that affected markets in Europe and Asia. Uncertainty surrounding the future of interest rates added an extra layer of volatility to financial markets, likely to persist until clearer statements from monetary authorities.

Meanwhile, meteorological conditions in Brazil and Vietnam remain on the market's radar. Although the hot and dry weather in Vietnam continues to concern, the prospects of rain in Brazil next week impacted coffee prices, intensifying the declines. However, there is an important caveat, as rains could disrupt the post-harvest process, affecting production. In Brazil, the physical market closed with devaluations in several trading places, reflecting the downward trend observed in futures markets.

Source: Notícias Agrícolas