MILAN – Five consecutive gains have brought coffee futures markets close to last month’s highs. Yesterday, Tuesday 20th August, New York and London posted fresh gains, approaching the record levels seen in the first ten days of July. December Arabica coffee rose 1.7% to 248.50 cents. November Robusta coffee gained 3.2% to close at $4,619 after hitting a monthly high of $4,656.
Fundamentals remain unchanged, with climate issues in Brazil and Vietnam – exacerbated by the frost that hit the Brazilian coffee belt at the beginning of last week – fuelling fund buying in both coffee futures markets.
“The persistent dry weather in the arabica coffee regions is raising concerns about the productive potential of the next crop, especially if the rains are delayed,” said Guilherme Morya, coffee analyst at Rabobank.
According to Cooxupé, Brazil’s largest cooperative, the coffee trees in many growing regions have not received significant amounts of rain for around four months.
Somar Meteorology confirms that Minas Gerais has been completely dry for the past week. It is feared that the excessive dryness, combined with rising temperatures, could lead to premature flowering and flower abortion.
On the other hand, it is not yet possible to assess the consequences of the frost that occurred at the beginning of the second decade of August.
According to an initial assessment by experts, the frosts were much more localised and less intense than in 2021 and should not affect the production potential of the next harvest.
“The normalised difference vegetation index (NDVI), used to quantify the health and density of vegetation, is more positive in 2024 than in the same period in 2021, when the coffee plantations were hit by frost, and could help mitigate possible damage caused by low temperatures” says Laleska Moda, Coffee Analyst at Hedgepoint Global Markets, in an interview with Notícias Agrícolas.
“Monitoring the index over the next few weeks, as well as the early flowerings of the 2025/26 harvest, will give us a better idea of the possible damage caused to the crops and the production potential for the next cycle,” the analyst noted.
On the Robusta side, dealers say exports from Vietnam remain slow, while there was talk that farmers in Indonesia were holding onto stocks in the hope that prices may rise further, according to Reuters
