On Monday, coffee prices climbed on heightening weather concerns in Brazil and Vietnam, two of the world’s leading exporters of the caffeine commodity.
US coffee futures for December delivery advanced 1.15% to $2.46 per pound on November 04, snapping their two-session losing streak. Moreover, analysts predict a 0.80% bump to $2.48 on the following trading day.
Somar Meteorologia reported that Minas Gerais received only 27.40 mm of rain last week, 36.00% below the historical average. Minas Gerais is Brazil’s largest arabica-producing region, responsible for nearly 50.00% of the Latin American country’s total output.
Industry watchers estimate that Brazilian coffee production in the 2023/24 marketing year plummeted by roughly 20.00% year-over-year (YoY). As a result, prices rose sharply at an annualized rate of 49.00% to an average of $254.00 per 60-kilogram bag.
Meanwhile, Typhoon Yagi devastated Vietnam’s Central Highlands region, a leading supplier of the cheaper robusta bean. Hanoi reported an average coffee price of $3,896.00 per MT in January, up by almost 60.00% YoY due to successive heavy storms.
Commodity analyst Expana noted that in September, arabica prices surged to a 13-year high, while robusta prices hit their highest in 47 years. Lastly, the International Coffee Organization (ICO) highlighted that global coffee prices hiked by nearly 20.00% in the third quarter to a 10-year peak.
Brazil Braces for Long-term Coffee Crop Damage
Brazil has experienced consistently below-average rainfall since April, damaging coffee trees during their crucial flowering stage. According to Cemaden, the country’s natural disaster monitoring center, 2024 has been Brazil’s driest year since 1981.
Declining production in the world’s largest export seller significantly tightened global inventories. ICE-monitored arabica inventories sank to a four-month low of 795,874 bags on October 03, while robusta stockpiles plunged to a five-month low of 3,934 lots last week.
Resilient demand in Europe and China also supported international coffee prices. On October 07, the ICO disclosed that global exports spiked by 6.50% year over year to 10.90 million bags.
