Rains in Brazil make coffee flirt with the 180 cent line in NY

The return of rains in the coffee producing areas of Brazil ended up triggering a strong sales movement in arabica futures contracts on the New York Stock Exchange. The March 2024 position, which reached 203.50 cents per pound at the high of December 19, flirts with the 180 cent line at the beginning of 2024. It's a decline of more than 20 cents — or 11% — in less than a month.

According to the analyst at Consultoria SAFRAS & Mercado, Gil Barabach, the drop in oil and exchange rate volatility also influence the behavior of the coffee futures market at the beginning of 2024. “The return of humidity in the Southeast Region of Brazil over the last few weeks of December served as a stimulus for a correction in the price curve. And the forecast of more intense and regular rains throughout January ends up reinforcing the more positive feeling surrounding the next Brazilian harvest. And of course, it leads to a dismantling of climate protection and ends up putting pressure on future coffee prices,” said Barabach.

The analyst highlights that the coffee market was already showing signs that it was too 'stretched' at the end of last year, in addition to showing inconsistencies, with more distant maturities being cheaper than the spot position, which was quite inflated.

Source: Revista Cafeicultura