On Tuesday, coffee contracts dropped due to recent rains in Brazil, which partially eased drought impacts and weighed on arabica prices.
US coffee futures for December shipments declined by -0.72% to $242.30 per pound on September 03’s Asian afternoon session.
Somar Meteorologia reported that Minas Gerais, Brazil, which accounts for around 30.00% of arabica crops, gained 13.80 mm of rain. On the other hand, robusta climbed on worries of drought in Vietnam, potentially curbing global supplies.
Moreover, strong coffee exports from Brazil pressured arabica prices. Based on reports from the Brazilian Trade Ministry, the country’s July shipments of the beans increased by 44.00% to 202,000 metric tons (MT).
In addition, Cecafe stated that Brazil’s 2023/24 deliveries jumped by 33.00% year-over-year, hitting a record of 47.30 million bags.
The ICO reported that global June shipments went up by 3.80% to 10.78 million bags. Also, October-June global exports rose by 10.10% to 103.47 million bags.
Another bearish factor for coffee prices is the recovery in ICE’s inventories from historically low levels.
The ICE-monitored arabica supplies spiked by one and a half years to 847,873 bags. Furthermore, its arabica outputs rose to a year high of 6,521 lots, beating the 1,958 lots posted in February 2024.
US Holiday Weighed on Robusta Coffee
In London, robusta coffee prices reversed from last week’s gains due to a US holiday that weighed on its costs.
On Monday, the beans dropped by 5.50% as robusta’s relative-strength index leaned toward an overbought level.
Analysts say the low stock environment in the US can guarantee volatility. They add that traders should consider export distributions around the Red Sea, congested Brazilian ports, and the incoming deforestation rules from the European Union.
Meanwhile, compiled data from experts showed that the robusta coffee rally used in beverage products narrowed its discount to greater quality arabica variety.
