Concerns About Global Supply and Climatic Conditions

The contracts for arabica for July 2024 rose by 1050 points, reaching 217.20 cents/lbp, while other maturities also recorded significant increases. This increase of more than 5% reflects uncertainty regarding future product availability, exacerbated by unfavorable climatic conditions in key producing regions.

Climatic conditions in Vietnam, one of the largest producers of robusta coffee, continue to influence the market. The lack of adequate rainfall and high temperatures are negatively affecting the recovery of the country's coffee plantations. Consequently, robusta prices have also risen significantly, with increases of up to $237 per ton in futures contracts. The forecast of a 20% drop in Vietnam's coffee production for the 2023/24 crop year further intensifies concerns, especially since the last harvest was also below expectations.

In Brazil, although favorable weather is helping the harvest gain momentum, the low volumes harvested so far are beginning to worry the market. The absence of rain in Minas Gerais for four consecutive weeks exacerbates the situation, affecting the quality and yield of the plants. Analysts emphasize the importance of Brazilian producers taking advantage of high prices to ensure the sustainability of future production cycles. Additionally, the focus on the quality of the sieve, with many producers reporting below-average numbers, is crucial for determining future supply and the competitiveness of Brazilian coffee in the international market.

Source: Notícias Agrícolas