Improved Weather Conditions in Brazil Pressure Coffee Prices and Reduce Trading Volume

The coffee price drops on Thursday (24th) reflect an improvement in weather conditions in Brazil, as rain arrives at a strategic moment for the development of the 2025 crop. These showers help set the coffee blossoms, a crucial stage for determining future yields, and ease investors’ concerns about the prolonged drought that recently affected plantations. This alleviation of the water deficit has led to a price correction in arabica and robusta futures contracts, which saw significant declines on the New York and London exchanges.

Arabica fell by as much as 690 points for the December 2024 contract, while robusta also saw drops across various contracts, directly influenced by expectations of crop recovery in Brazil. The negative price reaction reflects a market adjustment as it now considers a possible slight increase in global supply for upcoming harvests. However, uncertainty remains, as continued and regular rainfall will be crucial for a full production recovery, particularly for arabica, which is more sensitive to water shortages.

In the Brazilian domestic market, the trading volume was reduced, with producers offering prices lower than usual relative to international contracts. This bearish pressure was observed in both Type 6 Arabica and Pulped Natural Coffee, with price declines in regions such as Machado, Varginha, and Campos Gerais. The limited transaction volume reflects producers’ caution, as they prefer to wait for a potential improvement in conditions and price stabilization before committing to new sales, given the uncertainties still surrounding the 2025 crop.

Source: Notícias Agrícolas