Robusta futures in London saw a notable decline of up to 2.7% on Monday, only to fluctuate between gains and losses later in the session. Similarly, Arabica futures in New York dropped by as much as 2.6% before rebounding from their lows.
According to Daria Efanova, head of research at Sucden Financial, the ongoing dry conditions in Vietnam, the leading exporter of robusta coffee, have intensified market volatility. Efanova highlighted in a report on Monday that this situation has maintained a 60-day measure of price swings near its highest levels since at least 2008.
“While we anticipate continued short-term turbulence, our outlook for the longer term remains cautiously optimistic,” remarked Efanova.
Concerns over below-average rainfall in Brazil, a key supplier of Arabica coffee, have further contributed to volatility in the market. Efanova noted that speculative demand has surged following repercussions from disruptions in the cocoa market.
“The trajectory of coffee prices in the near future will largely hinge upon weather patterns in the coming months,” Efanova emphasized. “We maintain a sense of caution regarding potential heat waves and heavy rains, which could significantly impact the pricing dynamics of Arabica and Robusta varieties.”
Marcelo Moreira, who monitors coffee markets for Archer Consulting, highlighted recent increases in long positions by money managers in coffee. However, he cautioned that their future actions could exert downward pressure on prices in the short term. Moreira pointed out that investors are closely monitoring the impending expiration of July Arabica options on Wednesday, with significant open interest observed in certain put options.