Instability and Depreciation Mark the Futures Market for Arabica Coffee

The Arabica coffee futures market closed the week with significant depreciation in both the London and New York terminals, reflecting persistent instability despite the Brazilian harvest progressing smoothly. The sharp decline underscores the ongoing uncertainty and volatility dominating the Arabica coffee market.

In London, despite the steep drop, robusta coffee contracts managed to stay above $4000 per ton, with the July/24 contract closing at $4120 per ton, a decrease of $150. The September/24, November/24, and January/25 contracts also saw depreciations, closing at $3987, $3854, and $3720 per ton, respectively. The liquidation pressure was intensified by news of Brazil's coffee harvest progress, which was 21% complete as of May 28, slightly ahead of the previous year and in line with the five-year average, according to Safras.

Despite the selling pressure, adverse weather conditions continue to support prices in the medium term. The lack of rain in Asia and concerns about production in Vietnam may positively influence prices again. In Brazil, the physical market followed the depreciation trend with significant price drops in several key trading areas. For example, in Guaxupé/MG, type 6 hard drink fell by 3.41%, trading at R$ 1,275.00, while type peeled cherry dropped by 3.29%, priced at R$ 1,321.00. These variations indicate the complex dynamics of the coffee market, influenced by both climatic factors and market movements and harvest progress.

Source: Notícias Agrícolas