MILAN – The bearish interlude on the coffee futures markets lasted only one session. After last Friday’s declines, the two coffee exchanges edged higher yesterday, Monday 30 September, posting marginal gains: the main contracts of Ice Arabica and Ice Robusta gained 0.4% and 0.3% respectively, closing at 269.15 cents and $5482, respectively, recovering their initial losses.
In New York, speculators trimmed their net long position in Arabica coffee, over the week of trade leading up to Tuesday 24th September, by 1,982 lots to 41,649 lots, according to the latest Commitment of Traders.
The weather in Brazil remains the dominant factor: forecasts of substantial rainfall in the Brazilian coffee belt initially pushed markets down.
Then, the realisation that the rains, even if they are abundant, will not be enough to repair the damage that plantations have already suffered as a result of this year’s long drought, pushed coffee futures prices onboth exchanges up again.
Meanwhile, new forecasts from ClimaTempo arrived today, which are decidedly less than optimistic. The Brazilian TV weather channel claims that dry weather conditions will prevail again this week in most areas.
In fact, a new heat wave is spreading over the interior areas of Brazil and will bring above-average temperatures in the coming days. We will have to wait until the second week of October to see significant rainfall, says ClimaTempo.
Alysson Fagundes, an agronomic engineer at Fundação Procafé, reiterated that the damage suffered by trees here is irreversible and the arrival of the rains will at best prevent further damage. “No climate scenario predicts a bumper harvest next year, the current rainfall will at best limit the losses.”
According to Fagundes, all Arabica production areas are strongly affected by the drought, with the partial exception of Espírito Santo, which was less affected.
