MILAN – Coffee futures markets closed higher for the fourth straight session on Thursday. Ice Arabica March contract appreciated by a further 820 points to close at 279.40 cents, the highest level for the benchmark price in 13-1/2 years. Strong gains were also recorded in London, where the contract for January delivery settled at $4,777, up more than 3.1% from the previous day.
The market rally was driven by worsening production prospects in Brazil and bad weather in Vietnam, where this year crop could shrink by as much as 10% to possibly the lowest in a decade.
The situation in Brazil is also worrying. Reports from traders and analysts who are visiting production areas to prepare their initial forecasts and early estimates point to a sharp reduction in the potential of this year’s crop due to the long winter drought.
“Despite the recent rainfall, the soil moisture is low,” said a local dealer interviewed by Reuters. Meanwhile, dwindling stocks and concerns about next year’s crop have pushed domestic Arabica prices to the highest levels since early 2022.
In other news, StoneX released its first estimate for Brazil’s 2025/26 crop yesterday. The American financial services company expects production to fall by 0.4% next year to 65.6 million bags.
The Arabica crop will fall by 10.5% to 40 million bags. Robusta production, on the other hand, will rise sharply by 20.9% to 25.6 million.
