On February 5, Arabica coffee futures in New York reached $4 per pound for the first time, as concerns over global supply continue to grow.
According to Bloomberg, fears are mounting over future production in Brazil, the world’s largest coffee producer, following a prolonged drought. Earlier in the season, Brazil’s strong exports further strained supply, and local farmers have already sold more of their crop than usual, raising questions about remaining stock for shipment.
“We should still expect some volatility until the next crop arrives,” said Pavel Cardoso, President of Brazil’s Coffee Industry Association.
Concerns also extend to Vietnam, the top producer of Robusta coffee, where poor weather conditions have affected yields. The U.S. Department of Agriculture predicts that global stockpiles could drop to a 25-year low as a result.
On February 5, the most-active Arabica futures contract surged by 4.6% before settling at $3.9775 per pound, marking a 3.8% increase from the previous session.
Meanwhile, inventories in exchange-monitored warehouses have been declining. However, Rabobank analyst Carlos Mera notes that a recent rise in coffee awaiting grading suggests that record prices are drawing more beans into the market.
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