Coffee prices soar as weather woes cloud global production outlook
Updates prices
By Marcelo Teixeira
NEW YORK, Sept 13 (Reuters) -Coffee prices hit multiyear highs on Friday at the Intercontinental Exchange, reacting to a worrisome outlook for global production due to unfavorable weather conditions, experts and market players said.
Robusta LRCc2 coffee, the type widely used to make instant coffee and ready-to-drink coffee beverages, rose to the highest price since the contract started trading in 2008 at $5,281 per metric ton. It gained 3.7% on Friday and 10% this week.
Arabica coffee KCc2, the milder variety preferred by high-end cafes such as Starbucks, matched the highest price since 2011 at $2.6045 per pound, gaining 4% in the session and 9.9% weekly.
The harshest drought on record in top grower Brazil is raising concerns about the country's 2025 crop, which is key to the global supply.
"The crops are really stressed, very poor condition, it is sad to see," said coffee agronomist Jonas Ferraresso, who advises coffee farms in Sao Paulo and Minas Gerais state.
He said that even if rains return in October, leading to the flowering phase, trees will hardly have energy to convert those flowers into fruits.
Coffee research institution Fundacao Procafe said in a note that it is unlikely that Brazil will be able to produce a large crop next year considering the state of the trees.
The situation is also worrying in Vietnam, the world's second largest producer and the largest grower of robusta.
Typhoon Yagi left hundreds dead in the country and brought heavy rains to the coffee areas just weeks before the start of the harvest. Rains can cause coffee berries to drop, hurting the quality, as well as disrupt drying operations.
Vietnam could see wetter-than-normal weather in coming months as the La Nina weather pattern is expected to develop.
"La Nina often brings drier than normal conditions to the Southeast coffee regions of Brazil and wetter conditions to the Vietnam highlands," said a U.S.-based coffee broker, adding the combination was undesirable for both regions in coming months.
In other soft commodities, December New York cocoa CCc2 rose 1.4% to $7,695 a ton. London cocoa LCCc2 gained 0.9% to 5,362 pounds per ton.
October raw sugar SBc1 fell 0.3% to 19.01 cents per lb, while October white sugar LSUc1 rose 1.6% to $548.60/ton.
Reporting by Marcelo Teixeira; additional reporting by Maytaal Angel; editing by Jonathan Oatis
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
