MILAN — Coffee futures markets closed lower yesterday, Thursday 17 October, with the trend being more pronounced on the Robusta side. In London, the contract for January delivery fell $154 (-3.2%) to close at $4,598, the lowest level for the benchmark since the third decade of August.
More modest declines were seen in New York, where the contract for December delivery lost 1.1% to settle at 255.15 cents.
The steeper declines on the Robusta side may reflect some arbitrage business in the coffee futures markets, with some investors selling Robusta and buying Arabica due to an unusual small price gap between the two.
Among the factors affecting market performance were the dollar’s strong recovery – with the greenback at 2 ½ month highs – and new weather forecasts from Brazil, promising rain for the latter part of this week and next.
Forecast models predict a moderate cool and wet front moving in from the southeast, assisting to keep temperatures in the mid-twenties in degrees Celsius.
However, experts in the field note that the rains may have come too late and that the potential of the next harvest is already compromised.
“Next crop won’t be big, we can already expect losses,” said Alysson Fagundes, an agronomist at coffee research institution Fundacao Procafe in Minas Gerais, the top Brazilian coffee-growing state, in an interview with Reuters.
Procafe said that at the end of September soils in the southern part of the state of Minas Gerais- the main coffee area – were lacking 250 millimeters (9.84 inches) of water when compared to ideal levels. That was the second largest soil moisture shortfall on record, says Procafe.
Irrigation, where present, has not been able to alleviate this deficit, as many water streams went dry.
Given the difficulties, many producers are opting for pruning the trees, according to a report from Reuters.
Farmers use this technique to stimulate the recovery of the plant, but that means the trees will not produce beans in the first year after pruning, only getting back to production in 2026, says a farmer quoted in the report.
Rain continues to fall in Vietnam too, where forecasters expect it will continue until at least next week. The situation will be monitored over the coming days, as a prolonged continuation of rainfall may potentially delay and hamper coffee harvesting.
