Impact of Drought in Brazil Drives Coffee Prices Higher in the Global Market

The significant increase in Arabica and Robusta coffee prices on the New York and London exchanges reflects growing concerns over the climatic conditions in Brazil, one of the world's largest coffee producers. The prolonged drought in several coffee-growing regions, which have seen no significant rainfall in the past 120 days, has negatively impacted the crops, leading to increased pressure on prices. This scenario is supported by entities such as Cooxupé and analyses from Barchart, which highlight the stress on the coffee plants due to the lack of rain, potentially compromising the quality and volume of future harvests.

In addition to adverse climatic conditions, the market is also closely monitoring the accelerated pace of coffee harvesting in Brazil, which is already 96% complete, according to data from Safras & Mercado. Although the rapid progress of the harvest might suggest good production performance, concerns over the quality of the beans and uncertainty about the full impact of the drought have kept prices elevated. This behavior in the futures market reflects a combination of factors, including both the immediate supply conditions and expectations for the next crop, directly influenced by the weather.

In the Brazilian physical market, prices have also followed the upward trend observed internationally, with increases in several trading regions. The rise in prices for coffee types such as type 6 hard drink and peeled cherry indicates a direct response to international quotes and domestic climatic conditions. Traditional growing regions like Machado and Varginha have seen considerable price hikes, underscoring the impact of adverse weather on product supply and highlighting Brazil's significance in the global coffee market.

Source: Notícias Agrícolas