MILAN – Coffee prices rose sharply yesterday on both markets following new reports showing that a new El Niño weather pattern has begun, which could affect coffee production in some regions. In New York, the most active contract for July delivery gained 945 point closing at 194.85 cents per lb, the highest level since the second decade of April.
In London, the most active contract for September delivery posted a $90 gain to end the day at a new record high of $2,726 a tonne.
The U.S. National Oceanic and Atmospheric Administration’s Climate Prediction Center said on Thursday that the El El Niño weather pattern is already happening: sea surface temperatures across the equatorial Pacific Ocean had risen 0.5 degrees Celsius above normal, and wind patterns have changed significantly.
Earlier this week, the Bureau of Meteorology of the Australian Government also activated an El Niño Alert.
This climatic phenomenon usually brings partial drought conditions for the Pacific Rim coffee countries such as Colombia and Indonesia. It could however bring with it further afield, the potential for increased rainfall for the coffee belt in South East Brazil.
A weaker dollar, at 2-week lows on Thursday, was bullish for coffee prices. A national holiday in Brazil and in many Latin American countries reduced selling affecting coffee prices.
Low coffee inventories are also supportive for ICE Arabica prices. Certified stocks in New York were at 6-1/2 month low of 552,221 bags on Thursday.
The Robusta market is marked by tight supplies in main producers. Buyers are scrambling for beans in No. 2 exporter Indonesia, dealers said, while farmers are sold out in Vietnam, reports Reuters.
Dealers said strong domestic demand in Brazil was also limiting exports of the country’s newly harvested conillon beans.
