Coffee Market Closes Lower Amid Rain Forecasts in Brazil and Rising Dollar

The coffee market ended Friday with significant declines in the futures prices for both arabica and robusta, marking a notable drop of over 1% in New York and up to 2% in London. Arabica initially traded higher at the beginning of the day, but forecasts of substantial rainfall in Brazil’s coffee-growing regions reversed the trend, pushing prices lower throughout the day. This shift highlights the market’s sensitivity to weather factors, especially during prolonged droughts in critical coffee-growing areas.

Rain forecasts over Brazil, particularly in Minas Gerais and Espírito Santo, are seen as positive for the future coffee supply as they ease drought-related concerns that threatened plantations. Expectations of heavy rainfall, with some areas possibly exceeding 100 mm, bring hope for crop recovery, though excess precipitation could impact bean quality. This moisture corridor forming over Brazil’s interior promotes an unstable climate, which could have mixed effects on the market depending on how the crops respond to these conditions.

In addition to the weather, the rise in the dollar against the real added further pressure on international prices, as the weakened Brazilian currency encourages local producers to increase export sales. However, in Brazil’s domestic market, arabica and robusta posted modest gains, reflecting a more localized appreciation. This opposite price movement suggests that internal demand for coffee remains stable, providing some support for domestic prices while the external market adjusts to both weather forecasts and currency fluctuations.

Source: Notícias Agrícolas