On Tuesday, coffee prices edged up on concerns that dry conditions in top producer Brazil may lead to smaller bean production.
Arabica contracts advanced 1.50% or 3.48 points to $235.88 per pound, hitting a three-month high.
Weather reports stated that Minas Gerais received only 9.50 mm of rain last week, or 44.00% of the historical average. The Brazilian state accounts for about 30.00% of the crop in the country.
Last year, drought and frost events also devastated the coffee supply. In addition, they have curbed the growth potential for the country’s crops for the next two years.
In line with this, experts projected that Brazil’s 2021/22 annual exports would tumble by 27.00% to 33.20 million bags. This outlook is lower from a record 45.67 million bags in 2020/21.
However, several analysts anticipated the production to recover by 16.80% to 55.70 million bags from a year earlier.
Another upside of prices is lower yield in Columbia, the world’s second-largest arabica producer. Growers reported that exports dropped by 18.00% year-over-year to 845,000 bags.
Nevertheless, signs of abundant global supplies are bearish for prices. The International Coffee Organization reported that global exports grew 0.60% YoY to 78.01 million bags from October to April.
Robusta coffee futures slip on Tuesday
Meanwhile, robusta coffee futures slightly declined 0.23% or 5.00 points to $2,128.00 per metric ton. Nevertheless, the contracts still hovered over a one-month high.
The ample supplies of robusta are negative for prices. Recently, Vietnam, the leading grower of these beans, reported that annual exports jumped 24.20% to 889,000 metric tons from January to May.
Moreover, Citigroup forecasted that the 2022/23 global coffee market would shift to a surplus of 3.50 million bags. The outlook improved from a 2021/22 deficit of 7.30 million bags.