Coffee Prices Rise Amid Frost Forecasts and Concerns for Brazilian Crop

Wednesday, the 7th, saw a significant increase in coffee prices in the international market, driven mainly by the forecast of a cold front expected to hit Brazil in the coming days. Arabica coffee prices in New York rose by more than 4%, reflecting concerns over possible frosts in Southern Minas Gerais, one of the country’s main coffee-producing regions. This price increase, with the September/24 contract reaching 246.30 cents/lbp, demonstrates the market's sensitivity to adverse weather conditions that could severely impact production.

Despite the rise in the futures market, the situation of the crops in Brazil is concerning. Weather forecasts indicate the possibility of localized frosts, which could compromise part of the harvest, especially in more vulnerable areas. Additionally, the low precipitation recorded in the Minas Gerais region, with only 5% of the historical average rainfall last week, further exacerbates concerns about plant health and productivity. However, it is important to note that the recovery of coffee stocks at the ICE, both for Arabica and Robusta, could exert downward pressure on prices in the medium term, limiting recent gains.

In the Brazilian physical market, prices followed the increase in futures contracts, with notable gains in major trading regions like Guaxupé and Varginha. The price rise reflects the expectation of a more restricted supply due to unfavorable weather conditions but also highlights the resilience of the local market in quickly responding to international market fluctuations. Coffee type 6 hard drink and peeled cherry type recorded significant increases, confirming the upward trend in response to climate uncertainties and supply and demand dynamics.

Source: Notícias Agrícolas