Drop in Coffee Prices Amid Rising Exports and Climate Uncertainties in Brazil

The coffee futures market experienced significant declines this Friday (6th), with prices pressured by risk aversion in commodity markets and a notable increase in global exports. The International Coffee Organization (ICO) reported a 12.2% rise in exports in July, which directly impacted futures contracts for arabica and robusta. The December 2024 arabica contract fell by 820 points, closing at 236.00 cents/lbp, while the November 2024 robusta dropped by $141, ending at $4,770/ton. This surge in global supply weighed on prices, indicating that the coffee market is facing external pressures that overshadow more localized factors, such as Brazil's climate situation.

Although market fundamentals remain the same, the dry weather and low humidity in Brazil’s main coffee-growing regions, such as Cerrado Mineiro and South Minas Gerais, are raising concerns about the upcoming harvest. The lack of rain is damaging the health of the crops, with significant leaf losses that compromise the production potential for the 2025 harvest. Producers already acknowledge that the drought will bring inevitable losses, but the extent of these damages is still being assessed. This uncertainty about the weather adds to the cautious outlook in the market, both in Brazil and internationally.

In the Brazilian physical market, prices also ended the day in decline, with producers wary of the climatic impacts. Arabica type 6 saw drops in various regions, with Franca/SP showing the largest decline of 3.33%, to R$1,450.00 per sack. The peeled cherry variety also experienced smaller decreases. This downward trend in the domestic market reflects producers' hesitation to sell due to uncertainties surrounding the future crop, which may further restrict price movements in the coming months until there is more clarity about weather conditions and their effects.

Source: Notícias Agrícolas