Rain Forecast in Brazil Triggers Drop in Coffee Prices on International Markets

The recent Barchart report indicates that the forecasted rains in Brazil's coffee-growing regions were the main factor driving the liquidation of coffee futures contracts, resulting in a significant drop in prices on international markets. Arabica saw sharp declines in its key contracts, with the December 2024 settlement falling by 1,090 points. Similarly, Robusta faced substantial losses, with the November 2024 contract closing with a decrease of $189 per ton. This movement was driven by expectations that the rains could benefit crops during the crucial flowering period.

However, weather forecasts suggest that the rains may be light and unstable, only helping to reduce heat, according to the Carvalhaes Office. This creates uncertainty about the real recovery of the crops, which rely on more consistent rainfall to ensure proper flowering. As such, the market could remain volatile in the coming weeks, depending on how the weather conditions unfold. These forecasts highlight the coffee market’s sensitivity to climatic variations, especially in a major producing country like Brazil.

Domestically, the coffee market also experienced a decline in physical prices. Both Arabica and pulped natural coffee saw significant drops in various regions, such as Machado/MG and Guaxupé/MG, where depreciation exceeded 2%. The climate uncertainty, coupled with the forecast of light and insufficient rains, raises concerns among producers, directly influencing the market and prices. Thus, the internal market volatility reflects the direct impact of weather conditions on Brazil's coffee crop expectations and supply.

Source: Notícias Agrícolas