Coffee Prices Rose amid Brazilian Weather Concerns

On Tuesday, coffee prices extended the previous week’s rally to a four-month high due to heavy rains in Brazil.

US coffee futures for March delivery increased by 2.69% to $190.75 per pound on February 21’s Asian afternoon session.

The gains were supported by recent weather concerns in Minas Gerais, Brazil’s largest arabica planting region. It is responsible for about 30.00% of the outputs.

The rains prevented farmers from going to the fields delaying fertilizer and pesticide applications. Also, it leads to more coffee rust in other trees, which can lower volumes.

According to analysts, the region received 63.40 millimeters per day of showers in the week ended February 12.

Also, hints of tighter US supplies can push toward higher prices. Based on latest statistics, January green coffee inventories dropped by -1.80% by mass to 6.27 million bags. 

Likewise, ICE arabica beans storage fell to a six-week low of 832,072 bags on Tuesday. Furthermore, ICE-monitored robusta outputs plunged to 5,933 lots, marking its lowest level, since the contract rules were altered in 2016.

In addition, smaller exports benefit prices, as the International Coffee Organization (ICO) reported on February 02. They mentioned that October to December shipments plummeted by -2.80% year-over-year to 30.27 million bags.

Harbin in China Bound to Build a Coffee Industry

Di Guochen, chairman of the coffee industry and communication alliance in Harbin, plans on growing the beans in South America. He aims to ship the output to China to process and sell to Northeast Asia.

Besides, he noted his deep understanding of the industry upon living in Brazil for several years. Therefore, he believes in the country’s cooperation in the sector.

Guochen added that a roasting plant built-in Heilongjiang could boost the Chinese coffee industry. In addition, it can be an advantage to Northeast Asian markets. Also, he pointed out that Japan and South Korea are significant consumers.

China has witnessed a widening coffee consumption market. Hence, experts expect it to be worth around $145.70 billion by 2025.

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